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The Price of Indoor Air Pollution: Evidence from Risk Maps and the Housing Market

Author

Listed:
  • Edward W. Pinchbeck
  • Sefi Roth
  • Nikodem Szumilo
  • Enrico Vanino

Abstract

This study 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 socioeconomic 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.

Suggested Citation

  • Edward W. Pinchbeck & Sefi Roth & Nikodem Szumilo & Enrico Vanino, 2023. "The Price of Indoor Air Pollution: Evidence from Risk Maps and the Housing Market," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(6), pages 1439-1473.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/725028
    DOI: 10.1086/725028
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    More about this item

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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