The Market Value of Reducing Cancer Risk: Hedonic Housing Prices with Changing Information
Ted Gayer
October 2002
Abstract
In this paper, we use housing price changes occurring after the realease of a regulatory agency;s environmental risk information to estimate the value people place on cancer risk reduction. Using a large orginal data set on the repeat sales of houses, matched with detailed data on hazardous waste cancer risk and newspaper publicity, we find that housing prices respond ina rational manner to changes in information about risk. Since the new information indicated that the sites in our smaple pose raltively low cancer risk, the informational release led residents to lower their risk beliefs, resulting inan average housing price increase of $56 to $87. This price change implies a statistical value per case of cancer of $4.3 million to $8.3million, which is similar to the estimates obtained in labor market studies of the value of a statistical life. Newspaper publicity about the local sites increased housing prices, suggesting that residents perceived the news as good.
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