The Lasting Effects of Crime: The Relationship of Discovered Methamphetamine Laboratories and Home Values

Joshua Congdon-Hohman

No 1114, Working Papers from College of the Holy Cross, Department of Economics

Abstract: This study estimates a household’s willingness to pay to avoid the stigma of crime while minimizing concerns of omitted variable bias. By assuming methamphetamine producers locate approximately at random within a narrowly defined neighborhood, this study is able to use hedonic estimation methods to estimate the impact of the discovery of a methamphetamine laboratory on the home values near that location. Specifically, the analysis designates those closest to the site as the treated, while those slightly farther away act as the comparison group. The discovery of a methamphetamine laboratory has a significant effect on the property values of those homes close to the location that peaks from six to 12 months after each lab’s discovery. The estimates found in this study range from a decrease in sale prices of ten to nineteen percent in the year following a laboratory’s discovery compared to the prices for homes that are farther away but still in the same neighborhood. Surprisingly, the impact does not appear to depend on intensity as both the discovery of a second lab and being very close to the discovered lab do not adversely impact home values.

Keywords: Location choice; crime valuation; methamphetamine; housing prices (search for similar items in EconPapers)
JEL-codes: H41 H76 K42 R32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2011-11
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Regional Science and Urban Economics, Volume 43:1, January 2013, pp. 31-41.

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https://hcapps.holycross.edu/hcs/RePEc/hcx/HC1114-Congdon_MethLabs.pdf (application/pdf)

Related works:
Journal Article: The lasting effects of crime: The relationship of discovered methamphetamine laboratories and home values (2013)
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