Substance Use Disorder Treatment Centers and Property Values

52 Pages Posted: 7 Jan 2019 Last revised: 24 Jun 2023

See all articles by Brady Horn

Brady Horn

University of New Mexico - Department of Economics

Aakrit Joshi

University of New Mexico

Catherine Maclean

Temple University

Date Written: January 2019

Abstract

Substance use disorders (SUDs) are a major social concern in the United States and other developed countries. There is an extensive economic literature estimating the social costs associated with SUDs in terms of healthcare, labor market outcomes, crime, traffic accidents, and so forth. However, beyond anecdotal claims that SUD treatment centers (SUDTCs), settings in which patients receive care for their SUDs, have a negative effect on property values, there is scant empirical work on this question. In this paper, we investigate the effect of SUDTCs on residential property values using data from Seattle, Washington, and SUDTC location, entry, and exit information. To mitigate bias from the potential endogeneity of SUDTC location choices, we apply a spatial differences-in-differences (SDD) model, which uses property and SUDTC location to construct treatment and comparison groups. Our findings suggest that SUDTCs endogenously locate in lower value areas, and naïve models imply that the entry of an SUDTC leads to a 3.4% to 4.6% reduction in property values. When an SDD model is applied, we find no evidence that SUDTCs affect property values. Overall, our findings suggest anecdotal claims that SUDTCs reduce property values are potentially overstated.

Suggested Citation

Horn, Brady and Joshi, Aakrit and Maclean, Catherine, Substance Use Disorder Treatment Centers and Property Values (January 2019). NBER Working Paper No. w25427, Available at SSRN: https://ssrn.com/abstract=3311402

Brady Horn (Contact Author)

University of New Mexico - Department of Economics ( email )

1915 Roma NE/Economics Building
Albuquerque, NM 87131
United States

Aakrit Joshi

University of New Mexico

107 Humanitites Building
Albuquerque, NM 87131-1221
United States

Catherine Maclean

Temple University ( email )

Philadelphia, PA 19122
United States

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