Opioid Crisis and Real Estate Prices

24 Pages Posted: 12 Nov 2020

See all articles by Claudia Custodio

Claudia Custodio

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Dragana Cvijanovic

Cornell SC Johnson College of Business; Warwick Business School, University of Warwick

Moritz Wiedemann

Imperial College London

Date Written: October 15, 2020

Abstract

This paper estimates the impact of opioid abuse on real estate prices. We exploit the variation in opioid prescriptions induced by the staggered passage of state laws which intend to limit the usage of opioids. We document a long-term negative relationship between opioid prescriptions and residential real estate prices. For a one standard deviation change in prescriptions (41.10 prescriptions per 100 people) we find a 1.36 percentage points change in home values over the following 5 years. We also estimate a positive increase in home prices of 0.54, respectively 0.91, percentage points in the first, respectively second year, following the passage of these laws. While our results are consistent with opioid usage having significant long lasting negative economic effects, they highlight the positive impact of limiting opioid supply on the real economy.

Keywords: Opioid crisis, real estate prices, health economics

JEL Classification: I10, I12, I18, R20, R30

Suggested Citation

Custodio, Claudia and Cvijanovic, Dragana and Wiedemann, Moritz, Opioid Crisis and Real Estate Prices (October 15, 2020). Available at SSRN: https://ssrn.com/abstract=3712600 or http://dx.doi.org/10.2139/ssrn.3712600

Claudia Custodio

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Dragana Cvijanovic (Contact Author)

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Warwick Business School, University of Warwick ( email )

Coventry CV4 7AL
United Kingdom

Moritz Wiedemann

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

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