Fear (as a Measure of Damages) Strikes Out: Two Case Studies Comparisons of Actual Market Behavior with Opinion Survey Research

Abstract:     
For more than a decade, since the early 1980's, a feeling has developed among homeowners and landowners in proximity to what have come to be known as Locally Undesirable Land Uses (LULUs) represent hazards to human health and safety. As a result, increasing numbers and amounts of claims for damages associated with property value diminution have been filed in both State and Federal Courts. The major reason given is the existence of "widespread public fear" and "widespread public perceptions of hazards" emanating from these LULUs. The list of claimed or perceived hazards is long and growing. The hazards include: water contamination from toxic and hazardous materials, soil contamination from toxic and hazardous materials, air contamination from toxic, hazardous and noxious materials, noise from airports or highways (or both), radiation from various sources, Electromagnetic fields (EMFs) and of course hazardous and toxic materials from landfills or waste storage facilities. All of this is in addition to visual and aural impacts that intrude on "quiet enjoyment". From these claims, and several important Court decisions based upon them, a mythology about the direct, linear relationship between "widespread perceived fear" and diminished values of residential properties proximate to these sources of perceived hazards has emerged. The objective of the research reported in this paper is to examine and test the premises on which that mythology has been constructed.

JEL Classifications: R22

Working Paper Series