The price of indoor air pollution: evidence from risk maps and the housing market

This paper uses the housing market to examine the costs of indoor air pollution. The authors focus on radon, a common indoor air pollutant that is the leading cause of lung cancer after smoking. The authors find a significant negative relationship between changes in published pollution risk levels – provided via the process of updating a radon risk map for England – and residential property prices: in other words, as published risk levels show an increase, prices decrease. However, decreasing risk does not lead to a rise in house prices. The paper also shows that information provided by the updated risk map led residents in higher socioeconomic groups to move away from radon-affected areas and residents from lower socioeconomic groups took their place, attracted by the lower house prices. The authors also calculate that the average willingness to pay to avoid the risk of indoor air pollution is 1.6% of a property’s price – this is the reduction in price that home-owners are willing to concede when selling a property that is affected by radon.