Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/227182 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13655
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
neighbourhood sorting
radon
house prices
risk information
indoor air pollution
JEL: 
R21
R28
Q53
H23
Document Type: 
Working Paper

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