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Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan's Law in Virginia
Author(s) -
Wentland Scott,
Waller Bennie,
Brastow Raymond
Publication year - 2013
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.12028
Subject(s) - simultaneity , economics , property crime , market liquidity , ordinary least squares , externality , censoring (clinical trials) , selection bias , econometrics , proxy (statistics) , instrumental variable , sample (material) , microeconomics , monetary economics , statistics , criminology , psychology , mathematics , violent crime , physics , chemistry , classical mechanics , chromatography
We examine neighborhood externalities that arise from the perceived risk associated with the proximity of a registered sex offender's residence. We find large negative externality effects on a property's price and liquidity, employing empirical techniques that include a fixed‐effects OLS model, a correction for sample selection bias and censoring using a Heckman treatment, and a three‐stage least‐squares model to account for simultaneity bias in the joint determination of a home's sale price and liquidity. Additionally, we find amplified effects for homes with more bedrooms (a proxy for children) and if the nearby offender is designated by the state as “violent.”