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

53 Pages Posted: 20 Jul 2006 Last revised: 26 Jun 2010

See all articles by Leigh L. Linden

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: May 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 sex 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 4 percent on average (about $5,500). We also find evidence that the effect varies with distance within this range -- houses next to an offender sell for about 12 percent less while those a tenth of a mile away or more show no decline. We combine our willingness-to-pay estimates with data on sexual crimes against neighbors to estimate the costs to victims of sexual offenses. We estimate costs of over $1 million per victim -- 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.

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 (May 2006). NBER Working Paper No. w12253. Available at SSRN: https://ssrn.com/abstract=905510

Leigh L. Linden

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

Jameel Poverty Action Lab ( email )

30 Wadsworth Street, E53-320
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Cambridge, MA 02142
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HOME PAGE: http://www.leighlinden.com

Innovations for Poverty Action ( email )

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United States

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

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

P.O. Box 7240
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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 (Contact Author)

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

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