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Quasi-experimental evidence on the effect of aircraft noise on apartment rents

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  • Boes, Stefan
  • Nüesch, Stephan

Abstract

Inferring the implicit price of an environmental good hinges on ceteris paribus conditions that are often hard to justify. This paper uses an unexpected change in flight regulations as source of exogenous variation and identifies aircraft noise effects from price adjustments in the market for rental apartments. Controlling for spatial and apartment heterogeneity, we find that aircraft noise reduces apartment rents by about 0.5% per decibel. Our results indicate (i) that noise discounts are overestimated in cross-sectional studies because aircraft noise tends to be negatively correlated with omitted neighborhood and housing amenities and (ii) that noise effects are unlikely to be constant over the entire noise range.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 69 (2011)
Issue (Month): 2 (March)
Pages: 196-204

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Handle: RePEc:eee:juecon:v:69:y:2011:i:2:p:196-204

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Quasi-experiment Housing market Aircraft noise Hedonic approach Difference-in-differences Repeat-sales Fixed effects;

References

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  1. Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
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  11. Daniel P. McMillen, 2003. "Neighborhood house price indexes in Chicago: a Fourier repeat sales approach," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 57-73, January.
  12. Jon P. Nelson, 2004. "Meta-Analysis of Airport Noise and Hedonic Property Values," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 1-27, January.
  13. van Praag, Bernard M. S. & Baarsma, Barbara E., 2004. "Using Happiness Surveys to Value Intangibles: The Case of Airport Noise," IZA Discussion Papers 1096, Institute for the Study of Labor (IZA).
  14. Lucas W. Davis, 2004. "The Effect of Health Risk on Housing Values: Evidence from a Cancer Cluster," American Economic Review, American Economic Association, vol. 94(5), pages 1693-1704, December.
  15. Gibbons, Stephen & Machin, Stephen, 2005. "Valuing rail access using transport innovations," Journal of Urban Economics, Elsevier, vol. 57(1), pages 148-169, January.
  16. Katrin Rehdanz & David J. Maddison, 2006. "Local Environmental Quality and Life-Satisfaction in Germany," Working Papers FNU-119, Research unit Sustainability and Global Change, Hamburg University, revised Sep 2006.
  17. Pope, Jaren C., 2008. "Buyer information and the hedonic: The impact of a seller disclosure on the implicit price for airport noise," Journal of Urban Economics, Elsevier, vol. 63(2), pages 498-516, March.
  18. Harding, John P. & Rosenthal, Stuart S. & Sirmans, C.F., 2007. "Depreciation of housing capital, maintenance, and house price inflation: Estimates from a repeat sales model," Journal of Urban Economics, Elsevier, vol. 61(2), pages 193-217, March.
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Citations

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Cited by:
  1. Almer, Christian & Boes, Stefan & Nuesch, Stephan, 2013. "How do Housing Prices Adjust After an Environmental Shock? Evidence from a State-Mandated Change in Aircraft Noise Exposure," Department of Economics Working Papers 37905, University of Bath, Department of Economics.
  2. Andersson, Henrik & Jonsson, Lina & Ögren, Mikael & Swärdh, Jan-Erik, 2012. "Estimating non-marginal willingness to pay for railway noise abatement: Application of the two-step hedonic regression technique," TSE Working Papers 12-360, Toulouse School of Economics (TSE).
  3. Stefan Boes & Stephan Nüesch & Steven Stillman, 2013. "Aircraft Noise, Health, And Residential Sorting: Evidence From Two Quasi‐Experiments," Health Economics, John Wiley & Sons, Ltd., vol. 22(9), pages 1037-1051, 09.
  4. Ioulia Ossokina & Gerard Verweij, 2014. "Urban traffic externalities: quasi-experimental evidence from housing prices," CPB Discussion Paper 267, CPB Netherlands Bureau for Economic Policy Analysis.
  5. Andreas Mense & Konstantin Kholodilin, 2014. "Noise expectations and house prices: the reaction of property prices to an airport expansion," The Annals of Regional Science, Springer, vol. 52(3), pages 763-797, May.
  6. Ioulia Ossokina & Gerard Verweij, 2011. "Quasi-experimental evidence on the effect of traffic externalities on housing prices," ERSA conference papers ersa11p606, European Regional Science Association.

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