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The Hidden Cost of Smoking: Rent Premia in the Housing Market

Author

Listed:
  • Cigdem Gedikli

    (Swansea University)

  • Robert Hill

    (University of Graz)

  • Oleksandr Talavera

    (University of Birmingham)

  • Okan Yilmaz

    (Swansea University)

Abstract

In this paper, we provide novel evidence on the additional costs associated with smoking. While it may not be surprising that smokers pay a rent premium, we are the first to quantify the size of this premium. Our approach is innovative in that we use text mining methods that extract implicit information on landlords' attitudes to smoking directly from Zoopla UK rental listings. Applying hedonic, matching and machine-learning methods to the text-mined data, we find a positive smoking rent premium of around 6 percent. This translates into 14.40GBP of indirect costs, in addition to 40GBP of weekly spending on cigarettes estimated for an average smoker in the UK.

Suggested Citation

  • Cigdem Gedikli & Robert Hill & Oleksandr Talavera & Okan Yilmaz, 2022. "The Hidden Cost of Smoking: Rent Premia in the Housing Market," Discussion Papers 22-06, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:22-06
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Smoking; Rental market; Hedonic regression; Matching; Text mining; Random forest; Smoking rent premium; Contracting frictions;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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