Housing Market Response to 2012 Northern Italy Earthquake: The role of house quality and changing risk perception

Marco Modica, Roberto Zoboli, Fabrizio Meroni, Vera Pessina, Thea Squarcina and Mario Locati
Additional contact information
Fabrizio Meroni: INGV, Milano, Italy
Vera Pessina: INGV, Milano, Italy
Thea Squarcina: INGV, Milano, Italy
Mario Locati: INGV, Milano, Italy

No 416, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

Abstract: This paper examines the housing market response to Northern Italy earthquake in May 2012. Available literature provides evidence of a drop in the average price of houses after a disaster mainly due to i) underestimation by households of disaster risk in area where its occurrence is low or ii) overreaction because of a higher risk perception triggered by the unforeseen extreme event. Here, we provide evidence that overreaction can play a significant role. We use the Northern Italy earthquake as an experiment that permits to estimate the response of housing value to the extreme event by means of a diff-in-diff models. Differently from other papers, we directly carry out the assessment of the damage earthquake scenario, by using macroseismic methods to evaluate the physical damage level of the Northern Italy earthquake. In this way we are able to compare different damage scenarios and providing information on subjective perception of risk. Moreover, to our knowledge, this is the first work providing evidence that the quality of the houses in relation to the ‘resistance to the tremor’ might also play a relevant role for subjective risk assessment.

Keywords: Earthquake risk; Housing market; Risk perception (search for similar items in EconPapers)
JEL-codes: Q52 R21 R32 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-04, Revised 2016-04
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0416.pdf First version, 2016 (application/pdf)
http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0416.pdf Revised version, 2016 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:srt:wpaper:0416

Access Statistics for this paper

More papers in SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies
Bibliographic data for series maintained by Alessandro Palma ().