The price of indoor air pollution: evidence from risk maps and the housing market

Edward W. Pinchbeck, Sefi Roth, Nikodem Szumilo and Enrico Vanino

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: indoor air pollution; neighbourhood sorting; house prices; risk information; radon (search for similar items in EconPapers)
JEL-codes: H23 Q53 R21 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2023-11-01
New Economics Papers: this item is included in nep-hea and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of the Association of Environmental and Resource Economists, 1, November, 2023, 10(6), pp. 1439 - 1473. ISSN: 2333-5955

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:118450

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