Year: 1998
Type: report
Abstract: We exploit the structure of the Clean Air Act to provide new evidence on the capitalization of total suspended particulates (TSPs) air pollution into housing values. This legislation imposes strict regulations on polluters in “nonattainment” counties, which are defined by concentrations of TSPs that exceed a federally set ceiling. TSPs nonattainment status is associated with large reductions in TSPs pollution and increases in county-level housing prices. When nonattainment status is used as an instrumental variable for TSPs, we find that the elasticity of housing values with respect to particulates concentrations ranges from 0.20 to 0.35. These estimates of the average marginal willingness to pay for clean air are robust to quasi-experimental regression discontinuity and matching specification tests. Further, they are far less sensitive to model specification than cross-sectional and fixed-effects estimates, which occasionally have the “perverse” sign. We also find modest evidence that the marginal benefit of reductions of TSPs is lower in communities with relatively high pollution levels,
DOI: 10.3386/w6826
Authors: Kenneth Chay, Michael Greenstone
Institution: University of California, Berkeley
Language: English
Topic: Housing Market and Economics
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3123396988