What Lies Beneath: Pipeline Awareness and Aversion

26 Pages Posted: 25 Sep 2017

See all articles by Evan Herrnstadt

Evan Herrnstadt

Compass Lexecon

Richard Sweeney

Boston College - Department of Economics

Date Written: September 2017

Abstract

Stated safety concerns are a major impediment to making necessary expansions to the natural gas pipeline network. While revealed willingness to pay to avoid existing natural gas pipelines appears small, it is difficult to know if this reflects true ambivalence or a lack of salience and awareness. In this paper, we test this latter hypothesis by studying how house prices responded to a deadly 2010 pipeline explosion in San Bruno, CA, which shocked both attention and information. Using multiple identification strategies, we fail to find any evidence of a meaningful shift in the hedonic price gradient around pipelines following these events. We conclude with a discussion of how this result relates to latent, fully informed preferences, as well as the implications for future pipeline expansions.

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Suggested Citation

Herrnstadt, Evan and Sweeney, Richard, What Lies Beneath: Pipeline Awareness and Aversion (September 2017). NBER Working Paper No. w23858. Available at SSRN: https://ssrn.com/abstract=3042416

Evan Herrnstadt (Contact Author)

Compass Lexecon ( email )

United States

HOME PAGE: http://www.evanherrnstadt.com

Richard Sweeney

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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