Measuring Residents' Willingness to Pay to Avoid Crime

83 Pages Posted: 20 Jan 2023

See all articles by Alexander Dentler

Alexander Dentler

affiliation not provided to SSRN

Enzo Rossi

Swiss National Bank; University of Zurich

Abstract

How much is a resident willing to pay to avoid falling victim to a crime.in the neighborhood? Home prices and the number of sales change following a crime. Notably, price changes do not fully reflect the willingness to pay to avoid crime because of market illiquidity. We introduce a model in which sellers are more informed than buyers. News events, such as the occurrence of a nearby crime, generate liquidity effects like the ones documented empirically. The willingness to pay depends on the type of crime and averages between 6%-25% of house valuations. These predictions are manifolds of the effect on prices estimated in this paper and documented in the literature.

Keywords: Crime, real estate, liquidity effects, density discontinuity

Suggested Citation

Dentler, Alexander and Rossi, Enzo, Measuring Residents' Willingness to Pay to Avoid Crime. Available at SSRN: https://ssrn.com/abstract=4331258 or http://dx.doi.org/10.2139/ssrn.4331258

Alexander Dentler (Contact Author)

affiliation not provided to SSRN

Enzo Rossi

Swiss National Bank ( email )

Research
Fraumuensterstr. 8
Zuerich, 8022
Switzerland

University of Zurich ( email )

Zürich
Switzerland

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