The Price of Indoor Air Pollution: Evidence from Risk Maps and the Housing Market

Edward Pinchbeck, Sefi Roth, Nikodem Szumilo and Enrico Vanino

Journal of the Association of Environmental and Resource Economists, 2023, vol. 10, issue 6, 1439 - 1473

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.

Date: 2023
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Working Paper: The price of indoor air pollution: evidence from risk maps and the housing market (2021)
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