Substance Use Disorder Treatment Centers and Property Values

Brady Horn (), Aakrit Joshi and Johanna Maclean

No 25427, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Substance use disorders (SUDs) are a major social concern in the United States and other developed countries. There is an extensive economic literature estimating the social costs associated with SUDs in terms of healthcare, labor market outcomes, crime, traffic accidents, and so forth. However, beyond anecdotal claims that SUD treatment centers (SUDTCs), settings in which patients receive care for their SUDs, have a negative effect on property values, there is scant empirical work on this question. In this paper, we investigate the effect of SUDTCs on residential property values using data from Seattle, Washington, and SUDTC location, entry, and exit information. To mitigate bias from the potential endogeneity of SUDTC location choices, we apply a spatial differences-in-differences (SDD) model, which uses property and SUDTC location to construct treatment and comparison groups. Our findings suggest that SUDTCs endogenously locate in lower value areas, and naïve models imply that the entry of an SUDTC leads to a 3.4% to 4.6% reduction in property values. When an SDD model is applied, we find no evidence that SUDTCs affect property values. Overall, our findings suggest anecdotal claims that SUDTCs reduce property values are potentially overstated.

JEL-codes: H0 I1 R3 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-hea and nep-ure
Note: EH PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Brady P. Horn & Aakrit Joshi & Johanna Catherine Maclean, 2021. "Substance Use Disorder Treatment Centers and Residential Property Values," American Journal of Health Economics, vol 7(2), pages 185-221.

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