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The effect of seismic hazard risk information on property prices: Evidence from a spatial regression discontinuity design

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  • Hidano, Noboru
  • Hoshino, Tadao
  • Sugiura, Ayako

Abstract

In this paper, we utilize a spatial two-dimensional regression discontinuity (RD) design to study how Tokyo's property market evaluates information on seismic hazard risk. This approach is superior to the conventional one-dimensional RD design as it is able to account for spatially heterogeneous treatment effects and reduce small-sample biases. Our data consists of residential property transactions from the 23-ward area of Tokyo. Our results show that the unit prices of residential properties in low-risk zones were between 13,970–17,380 JPY higher than those in high-risk zones depending on the type of seismic hazard risk. In addition, we find that information on seismic hazard risk does not significantly affect the prices of newly constructed apartments, which are more resistant to earthquake damage than older residences.

Suggested Citation

  • Hidano, Noboru & Hoshino, Tadao & Sugiura, Ayako, 2015. "The effect of seismic hazard risk information on property prices: Evidence from a spatial regression discontinuity design," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 113-122.
    • Handle: RePEc:eee:regeco:v:53:y:2015:i:c:p:113-122
    DOI: 10.1016/j.regsciurbeco.2015.05.005
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    Cited by:

    1. Olga Filippova & Cuong Nguyen & Ilan Noy & Michael Rehm, 2019. "Who cares? Future sea-level-rise and house prices," CESifo Working Paper Series 7595, CESifo.
    2. Franco, Sofia F. & Macdonald, Jacob L., 2018. "The effects of cultural heritage on residential property values: Evidence from Lisbon, Portugal," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 35-56.
    3. Olga Filippova & Cuong Nguyen & Ilan Noy & Michael Rehm, 2020. "Who Cares? Future Sea Level Rise and House Prices," Land Economics, University of Wisconsin Press, vol. 96(2), pages 207-224.
    4. Abbie A. Rogers & Fiona L. Dempster & Jacob I. Hawkins & Robert J. Johnston & Peter C. Boxall & John Rolfe & Marit E. Kragt & Michael P. Burton & David J. Pannell, 2019. "Valuing non-market economic impacts from natural hazards," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(2), pages 1131-1161, November.
    5. Ferreira, Susana & Liu, Haiyan & Brewer, Brady, 2018. "The housing market impacts of wastewater injection induced seismicity risk," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 251-269.
    6. Singh, Ruchi, 2019. "Seismic risk and house prices: Evidence from earthquake fault zoning," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 187-209.
    7. Masako Ikefuji & Roger J. A. Laeven & Jan R. Magnus & Yuan Yue, 2018. "Earthquake risk embedded in property prices: Evidence from five Japanese cities," Tinbergen Institute Discussion Papers 18-061/III, Tinbergen Institute.

    More about this item

    Keywords

    Regression discontinuity design; Seismic hazard risk; Property market; Hedonic price; Quasi-experiment;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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