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Fundamental Flaws of Social Regulation: The Case of Airplane Noise

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  • Morrison, Steven A
  • Winston, Clifford
  • Watson, Tara

Abstract

This article provides an economic assessment of federal regulatory policy toward airplane noise as encapsulated in the 1990 Airport Noise and Capacity Act (ANCA). This act mandated the elimination of certain aircraft, such as the Boeing 727 and DC-9, from all U.S. airports by the end of 1999 to meet quieter noise requirements. We find that the present discounted benefits of the ANCA, reflected in higher property values for homeowners, fall $5 billion short of the ANCA's cost to airlines, reflected in the reduced economic life of their capital stock. More fundamentally, we find that the net benefits that could have been generated by an economically optimal airplane noise tax amount to only $0.2 billion (present value). It appears that noise regulations have generated substantial costs to society when, in fact, there was little justification on efficiency grounds for regulatory intervention in the first place. Copyright 1999 by the University of Chicago.

Suggested Citation

  • Morrison, Steven A & Winston, Clifford & Watson, Tara, 1999. "Fundamental Flaws of Social Regulation: The Case of Airplane Noise," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 723-743, October.
  • Handle: RePEc:ucp:jlawec:v:42:y:1999:i:2:p:723-43
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    File URL: http://dx.doi.org/10.1086/467440
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
    2. Schipper, Youdi & Nijkamp, Peter & Rietveld, Piet, 1998. "Why do aircraft noise value estimates differ? A meta-analysis," Journal of Air Transport Management, Elsevier, vol. 4(2), pages 117-124.
    3. Small, Kenneth A, 1975. "Air Pollution and Property Values: Further Comment," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 105-107, February.
    4. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
    5. O'Byrne, Patricia Habuda & Nelson, Jon P. & Seneca, Joseph J., 1985. "Housing values, census estimates, disequilibrium, and the environmental cost of airport noise: A case study of Atlanta," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 169-178, June.
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    Cited by:

    1. Girvin, Raquel, 2009. "Aircraft noise-abatement and mitigation strategies," Journal of Air Transport Management, Elsevier, vol. 15(1), pages 14-22.
    2. Dekkers, Jasper E.C. & van der Straaten, J. Willemijn, 2009. "Monetary valuation of aircraft noise: A hedonic analysis around Amsterdam airport," Ecological Economics, Elsevier, vol. 68(11), pages 2850-2858, September.
    3. Thierry Bréchet & Pierre M. Picard, 2010. "The Price Of Silence: Markets For Noise Licenses And Airports," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1097-1125, November.
    4. Robert W. Hahn & Paul C. Tetlock, 2008. "Has Economic Analysis Improved Regulatory Decisions?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 67-84, Winter.
    5. McMillen, Daniel P., 2004. "Airport expansions and property values: the case of Chicago O'Hare Airport," Journal of Urban Economics, Elsevier, vol. 55(3), pages 627-640, May.
    6. Brueckner, Jan K. & Girvin, Raquel, 2008. "Airport noise regulation, airline service quality, and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 42(1), pages 19-37, January.
    7. Jasper Dekkers & Willemijn van der Straaten, 2008. "Monetary Valuation of Aircraft Noise," Tinbergen Institute Discussion Papers 08-064/3, Tinbergen Institute.
    8. Morimoto, Risako & Hope, Chris, 2005. "Making the case for developing a silent aircraft," Transport Policy, Elsevier, vol. 12(2), pages 165-174, March.

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