Rare Events and Risk Perception: Evidence from Fukushima Accident

47 Pages Posted: 11 Mar 2016

See all articles by Renaud Coulomb

Renaud Coulomb

University of Melbourne

Yanos Zylberberg

University of Bristol

Date Written: March 9, 2016

Abstract

We study changes in nuclear-risk perception following the Fukushima nuclear accident of March 2011. Using an exhaustive registry of individual housing transactions in England and Wales between 2007 and 2014, we implement a difference-in-difference strategy and compare housing prices in at-risk areas to areas further away from nuclear sites before and after Fukushima incident. We find a persistent price malus of about 3.5% in response to the Fukushima accident for properties close to nuclear plants. We show evidence that this price malus can be interpreted as a change in nuclear-risk perception. In addition, the price decrease is much larger for high-value properties within neighborhoods, and deprived zones in at-risk areas are more responsive to the accident. We discuss various theoretical channels that could explain these results.

Keywords: Hedonic prices, housing markets, risk perception, nuclear power

JEL Classification: D80, Q51, Q53, R21, R23, R31

Suggested Citation

Coulomb, Renaud and Zylberberg, Yanos, Rare Events and Risk Perception: Evidence from Fukushima Accident (March 9, 2016). Available at SSRN: https://ssrn.com/abstract=2746213 or http://dx.doi.org/10.2139/ssrn.2746213

Renaud Coulomb (Contact Author)

University of Melbourne ( email )

Melbourne, 3010
Australia

Yanos Zylberberg

University of Bristol ( email )

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