There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values from Megan's Laws

55 Pages Posted: 19 May 2006  

Leigh L. Linden

The University of Texas at Austin; National Bureau of Economic Research; Jameel Poverty Action Lab; Innovations for Poverty Action; Institute for the Study of Labor (IZA); Bureau for Research and Economic Analysis of Development (BREAD)

Jonah E. Rockoff

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2006

Abstract

We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of these offenders to exploit variation in the threat of crime within small homogenous groupings of homes, and we use the timing of sex offenders' arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders' locations that are extremely localized. Houses within a one-tenth mile area around the home of a sex offender fall by four percent on average (about $5,500) while those further away show no decline. These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender. Using data on crimes committed by sexual offenders against neighbors, we estimate costs to victims of sexual offenses under the assumptions that all of the decline in property value is due to increased crime risk and that neighbors' perceptions of risk are in line with objective data. We estimate victimization costs of over $1 million - far in excess of estimates taken from the criminal justice literature. However, we cannot reject the alternative hypotheses that individuals overestimate the risk posed by offenders or view living near an offender as having costs exclusive of crime risk.

Keywords: crime, property values, child safety, victimization costs

JEL Classification: R2, K4

Suggested Citation

Linden, Leigh L. and Rockoff, Jonah E., There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values from Megan's Laws (April 2006). Available at SSRN: https://ssrn.com/abstract=903178 or http://dx.doi.org/10.2139/ssrn.903178

Leigh L. Linden (Contact Author)

The University of Texas at Austin ( email )

Austin, TX 78712
United States
+1 (512) 475-8556 (Phone)

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

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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

Jameel Poverty Action Lab ( email )

30 Wadsworth Street, E53-320
Cambridge, MA 02142
United States

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

Innovations for Poverty Action ( email )

1731 Connecticut Ave, 4th floor
New Haven, CT 20009
United States

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

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Bureau for Research and Economic Analysis of Development (BREAD) ( email )

Duke University
Durham, NC 90097
United States

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

Jonah E. Rockoff

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Paper statistics

Downloads
466
Rank
43,018
Abstract Views
3,189