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The Market Value of Reducing Cancer Risk: Hedonic Housing Prices with Changing Information

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Author Info
Ted Gayer (Public Policy Institute, Georgetown University)
James T. Hamilton (Sanford Institute, Duke University)
W. Kip Viscusi (Harvard Law School)

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Abstract

In this paper, we use housing price changes occurring after the release of a regulatory agency's environmental risk information to estimate the value people place on cancer risk reduction. Using a large original data set on the repeat sales of houses, matched with detailed data on hazardous waste cancer risk and newspaper publicity, we find that housing prices respond in a rational manner to changes in information about risk. Since the new information indicated that the sites in our sample pose relatively low cancer risk, the informational release led residents to lower their risk beliefs, resulting in an average housing price increase of $56 to $87. This price change implies a statistical value per case of cancer of $4.3 million to $8.3 million, which is similar to the estimates obtained in labor market studies of the value of a statistical life. Newspaper publicity about the local sites increased housing prices, suggesting that residents perceived the news as good.

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Publisher Info
Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 69 (2002)
Issue (Month): 2 (October)
Pages: 266-289
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Handle: RePEc:sej:ancoec:v:69:2:y:2002:p:266-289

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  1. John Abowd & Charles Mulvey, 1979. "Estimating the Union-Non-union Wage Differential: A Statistical Issue," Working Papers 488, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  2. Anna Alberini & Stefania Tonin & Margherita Turvani, 2009. "The Value of Reducing Cancer Risks at Contaminated Sites: Are More Heavily Exposed People Willing to Pay More?," Working Papers 2009.60, Fondazione Eni Enrico Mattei. [Downloadable!]
  3. Grace Wong, 2004. "Has SARS Infected the Property Market? Evidence from Hong Kong," Working Papers 11, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  4. Wernstedt, Kris & Alberini, Anna & Heberle, Lauren & Meyer, Peter, 2004. "The Brownfields Phenomenon: Much Ado about Something or the Timing of the Shrewd?," Discussion Papers dp-04-46, Resources For the Future. [Downloadable!]
  5. Anna Alberini & Stefania Tonin & Margherita Turvani & Aline Chiabai, 2006. "Paying for Permanence: Public Preferences for Contaminated Site Cleanup," Working Papers 2006.113, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  6. Grace Wong, 2004. "Has SARS Infected the Property Market? Evidence from Hong Kong," Working Papers 867, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  7. Mikael Svensson, 2009. "Precautionary behavior and willingness to pay for a mortality risk reduction: Searching for the expected relationship," Journal of Risk and Uncertainty, Springer, vol. 39(1), pages 65-85, August. [Downloadable!] (restricted)
  8. Svensson, Mikael, 2007. "Precautionary Behavior and Willingness to Pay for a Mortality Risk Reduction:Searching for the Expected Relationship," Working Papers 2007:3, Örebro University, Swedish Business School, revised 18 Feb 2008.
  9. Jeffrey P. Cohen & Cletus C. Coughlin, 2008. "Airport-related noise, proximity, and housing prices in Atlanta," Working Papers 2005-060, Federal Reserve Bank of St. Louis. [Downloadable!]
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