Abstract
This paper uses the housing market to examine the costs of indoor air pollution. We focus on radon, a common indoor air pollutant which is the leading cause of lung cancer after smoking. For identification, we exploit a natural experiment whereby a risk map update in England induces exogenous variation in published pollution risk levels. We find a significant negative relationship between changes in published pollution risk levels and residential property prices. Interestingly, we do not find a symmetric effect for decreasing risk. We also show that the update of the risk map led higher socio-economic groups (SEGs) to move away from affected areas, attracting lower SEG residents via lower prices. Overall, our results demonstrate that indoor air quality has material economic effects on the housing market and provide novel policy-relevant insights into how the market responds to information on environmental risks.
Original language | English |
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Pages (from-to) | 1439-1473 |
Number of pages | 35 |
Journal | Journal of the Association of Environmental and Resource Economists |
Volume | 10 |
Issue number | 6 |
Early online date | 9 Mar 2023 |
DOIs | |
Publication status | Published - Nov 2023 |
Keywords
- indoor air pollution
- neighbourhood sorting
- house prices
- risk information
- radon