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The lasting effects of crime: The relationship of discovered methamphetamine laboratories and home values

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  • Congdon-Hohman, Joshua M.

Abstract

This study estimates a household's willingness to pay to avoid the stigma of crime while minimizing concerns of omitted variable bias. By assuming methamphetamine producers locate approximately at random within a narrowly defined neighborhood, this study is able to use hedonic estimation methods to estimate the impact of the discovery of a methamphetamine laboratory on the home values near that location. Specifically, the analysis designates those closest to the site as the treated, while those slightly farther away act as the comparison group. The discovery of a methamphetamine laboratory has a significant effect on the property values of those homes close to the location that peaks from 6 to 12months after each lab's discovery. The estimates found in this study range from a decrease in sale prices of 10% to 19% in the year following a laboratory's discovery compared to the prices for homes that are farther away but still in the same neighborhood.

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  • Congdon-Hohman, Joshua M., 2013. "The lasting effects of crime: The relationship of discovered methamphetamine laboratories and home values," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 31-41.
    • Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:31-41
    DOI: 10.1016/j.regsciurbeco.2012.11.005
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    2. Brülhart, Marius & Klinke, Gian-Paolo & Marcucci, Andrea & Rohner, Dominic & Thoenig, Mathias, 2023. "Price and Prejudice: Housing Rents Reveal Racial Animus," CEPR Discussion Papers 18050, C.E.P.R. Discussion Papers.
    3. Ooi, Joseph T.L. & Le, Thao T.T., 2013. "The spillover effects of infill developments on local housing prices," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 850-861.
    4. Phillips, David C. & Sandler, Danielle, 2015. "Does public transit spread crime? Evidence from temporary rail station closures," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 13-26.
    5. Hua, Nan & Yang, Yang, 2017. "Systematic effects of crime on hotel operating performance," Tourism Management, Elsevier, vol. 60(C), pages 257-269.
    6. Taggert J. Brooks & Brad R. Humphreys & Adam Nowak, 2020. "Strip Clubs, “Secondary Effects” and Residential Property Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(3), pages 850-885, September.
    7. Bruijn, L. Michelle & Ribas, Rafael P., 2022. "“No drugs in my back yard:” The ambivalent reception of cannabis retailers," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 103-121.
    8. Zhe Song & Chen Hao, 2022. "Housing price and criminal crime in China: direct and indirect influence," Applied Economics, Taylor & Francis Journals, vol. 54(40), pages 4647-4663, August.
    9. Andersson, Henrik & Blind, Ina & Brunåker, Fabian & Dahlberg, Matz & Fredriksson, Greta & Granath, Jakob & Liang, Che-Yuan, 2023. "What's in a Label? On Neighbourhood Labelling, Stigma and Housing Prices," SocArXiv xu759, Center for Open Science.
    10. Dealy, Bern C. & Horn, Brady P. & Berrens, Robert P., 2017. "The impact of clandestine methamphetamine labs on property values: Discovery, decontamination and stigma," Journal of Urban Economics, Elsevier, vol. 99(C), pages 161-172.
    11. Anastasia Klimova & Adrian D. Lee, 2014. "Does a Nearby Murder Affect Housing Prices and Rents? The Case of Sydney," The Economic Record, The Economic Society of Australia, vol. 90, pages 16-40, June.
    12. Chang, Zheng & Li, Jing, 2018. "The impact of in-house unnatural death on property values: Evidence from Hong Kong," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 112-126.
    13. Sotirios Thanos & Abigail L. Bristow & Mark R. Wardman, 2015. "Residential Sorting And Environmental Externalities: The Case Of Nonlinearities And Stigma In Aviation Noise Values," Journal of Regional Science, Wiley Blackwell, vol. 55(3), pages 468-490, June.
    14. Liang, Jian & Alexeev, Sergey, 2023. "Harm reduction or amplification? The adverse impact of a supervised injection room on housing prices," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    15. Steven B Caudill & Ermanno Affuso & Ming Yang, 2015. "Registered sex offenders and house prices: An hedonic analysis," Urban Studies, Urban Studies Journal Limited, vol. 52(13), pages 2425-2440, October.
    16. Chad Lawley, 2021. "Hog Barns and Neighboring House Prices: Anticipation and Post‐Establishment Impacts," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 1099-1121, May.
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    18. Taggert J. Brooks & Brad R. Humphreys & Adam Nowak, 2016. "Strip Clubs, “Secondary Effects,†and Residential Property Prices," Working Papers 16-17, Department of Economics, West Virginia University.

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    More about this item

    Keywords

    Location choice; Crime valuation; Methamphetamine; Housing prices;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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