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

Edward Pinchbeck, Sefi Roth (), Nikodem Szumilo and Enrico Vanino
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Sefi Roth: London School of Economics
Nikodem Szumilo: University College London

No 13655, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper uses the housing market to examine the costs of indoor air pollution. We focus on radon, an indoor air pollutant which is the largest source of exposure to natural ionising radiation and the leading cause of lung cancer after smoking. To overcome potential confounders, we exploit a natural experiment whereby a risk map update in England induces exogenous variation in published radon risk levels. Using a repeat-sales approach, we find a significant negative relationship between changes in published radon risk levels and residential property prices of affected properties. Interestingly, we do not find that the effect of increasing or decreasing radon risk is symmetric. We also show that the update of the risk map led higher socio-economic groups (SEGs) to move away from radon affected areas, attracting lower SEG residents via lower prices. Finally, we propose and utilise a new theoretical framework to account for preference based sorting which allows us to calculate that the average willingness to pay to avoid radon risk is £3,360.

Keywords: risk information; house prices; radon; neighbourhood sorting; indoor air pollution (search for similar items in EconPapers)
JEL-codes: H23 Q53 R21 R28 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2020-09
New Economics Papers: this item is included in nep-ene, nep-env, nep-hea and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Journal of the Association of Environmental and Resource Economists, 2023, 10 (6), 1439–1473

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