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Exceeding the Threshold: Analysis of Public Information Transfer using Instrumental Variables

dc.contributor.author Inder, Gabrielle
dc.date.accessioned 2014-04-16T13:40:04Z
dc.date.available 2014-04-16T13:40:04Z
dc.date.issued 2014-04-16
dc.identifier.uri https://hdl.handle.net/10161/8421
dc.description.abstract This paper examines how information transfer about contamination levels found at brownfield sites capitalizes into nearby property values. More specifically, a hedonic model is used to test the impact on housing transaction prices when a binary measure (i.e. exceeding a threshold or not) or a continuous measure (i.e. chemical levels) is used. In the analysis, I exploit the variation in the contaminant thresholds, caused by regulatory conditions defined by the state of Massachusetts, holding the contaminant level constant. As thresholds are tied to neighborhood attributes in areas surrounding brownfields, threshold exceedance is potentially correlated to unobserved factors that impact housing values. An instrumental variables approach is used to create variation in threshold exceedance through the use of an instrument that measures the presence to underground aquifers. After instrumenting for threshold exceedance, my estimates indicate that a 10.8% decrease in housing values occurs when a contaminant threshold is exceeded, while the continuous measures of toxicity indicate a negative but insignificant effect. These findings suggest that policy makers should consider information conveyance when creating policies to inform homeowners of pollution presence, as improved information provision may increase public awareness about local environmental concerns.
dc.language.iso en_US
dc.subject brownfields
dc.subject pollution
dc.subject housing markets
dc.subject hedonic analysis
dc.subject instrumental variables
dc.title Exceeding the Threshold: Analysis of Public Information Transfer using Instrumental Variables
dc.type Honors thesis
dc.department Economics


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