Information regulation: Do the victims of externalities pay attention?
Individuals living in metropolitan areas are exposed to a large number of industrial risks. Information regulation is a new tool to manage such risks. We ask if large-scale information initiatives directed at the general public can affect individual risk perceptions. The answer is affirmative. Using the publication of the Toxics Release Inventory as a case study, we find a decline in predicted property values when new information on pollution became available, indicating that homebuyers adjusted their risk perceptions upward. The response, however, is limited to sources of toxic emissions that are located at a moderate distance from the properties in our sample.
KeywordsInformation regulation Pollution prevention Toxics Release Inventor
Arora, S., Gangopadhyay, S. 1995Toward a theoretical model of voluntary overcomplianceJournal of Economic Behavior & Organization28289309CrossRefGoogle Scholar Baron, D.P. 2001Private politics, corporate social responsibility, and integrated strategyJournal of Economics & Management Strategy10745CrossRefGoogle Scholar Baumol, W.J., Oates, W.E. 1975The theory of environmental policyCambridge University PressCambridgeGoogle Scholar Boyle, M.A., Kiel, K.A. 2001A survey of house price Hedonic studies of the impact of environmental externalitiesJournal of Real Estate Literature9117144Google Scholar Bui, L., Mayer, C.J. 2003Regulation and capitalization of environmental amenities: Evidence from the toxics release inventory in MassachusettsReview of Economics & Statistics85693708CrossRefGoogle Scholar Case, D.W. 2001The law and economics of environmental information as regulationEnvironmental Law Reporter71077310789Google Scholar Cochran, W., Rubin, D.B. 1973Controlling bias in observational studiesSankyha35417446Google Scholar Elliott, M.R., Wang, Y., Kleindorfer, P., Lowe, R.A. 2004Environmental justice: Community pressure and frequency and severity of U.S. chemical industry accidentsJournal of Epidemiology and Community Health582430CrossRefGoogle Scholar
Environmental Protection Agency. (2000). Assessment of the incentives created by public disclosure of off-site consequence analysis information for reduction in the risk of accidental releases. D.C.: EPA.Google Scholar
Foreman, C.H.,Jr. 1998The promise and peril of environmental justiceBrookings Institution PressWashington, DCGoogle Scholar Gatzlaff, D.H., Haurin, D.R. 1998Sample selection and biases in local house value indicesJournal of Urban Economics43199222CrossRefGoogle Scholar Gayer, T., Hamilton, J., Kip Viscusi, W. 2000Private values of risk tradeoffs at superfund sites: Housing market evidence on learning about riskReview of Economics & Statistics82439451CrossRefGoogle Scholar Gayer, T., Hamilton, J., Kip Viscusi, W. 2002The market value of reducing cancer risk: hedonic housing prices with changing informationSouthern Economic Journal69266289CrossRefGoogle Scholar Hamilton, J.T. 1995Pollution as news: Media and stock market reactions to the toxics release inventory dataJournal of Environmental Economics & Management2898113CrossRefGoogle Scholar Heckman, J.J., Ichimura, H., Todd, P. 1998Matching as an econometric evaluation estimatorReview of Economic Studies65261294CrossRefGoogle Scholar Kennedy, P.W., Laplante, B., Maxwell, J. 1994Pollution policy: The role for publicly provided informationJournal of Environmental Economics & Management263143CrossRefGoogle Scholar Khanna, M., Quimio, W.R.H., Bojilova, D. 1998Toxics release information: a policy tool for environmental protectionJournal of Environmental Economics & Management36243266CrossRefGoogle Scholar Kiel, K.A. 1995Measuring the impact of the discovery and cleaning of identified hazardous waste sites on house valuesLand Economics71428435CrossRefGoogle Scholar Kiel, K.A., McClain, K.T. 1995aHouse prices during siting decision stages: The case of an incinerator from rumor through operationJournal of Environmental Economics & Management,28241255CrossRefGoogle Scholar Kiel, K.A., McClain, K.T. 1995bThe effect of an incinerator siting on housing appreciation ratesJournal of Urban Economics37311323CrossRefGoogle Scholar Kleindorfer, P.R., Orts, E.W. 1998Information regulation of environmental risksRisk Analysis18155170CrossRefGoogle Scholar Kohlhase, J.E. 1991The impact of toxic waste sites on housing valuesJournal of Urban Economics30126CrossRefGoogle Scholar Konar, S., Cohen, M.A. 1997Information as regulation: The effect of community right to know laws on toxic emissionsJournal of Environmental Economics & Management32109124CrossRefGoogle Scholar
Kunreuther, H., Slovic, P. (1996). Challenges in risk assessment and management. The Annals of the American Academy of Political and Social Science 545.Google Scholar
Kutty, N.K. 1995A dynamic model of landlord reinvestment behaviorJournal of Urban Economics37212237CrossRefGoogle Scholar Lyon, T.P., Maxwell, J.W. 2004Corporate environmentalism and public policyCambridge University PressCambridgeGoogle Scholar Maxwell, J.W., Lyon, T.P., Hackett, S.C. 2000Self-regulation and social welfare: The political economy of corporate environmentalismJournal of Law & Economics43583617CrossRefGoogle Scholar McMillen, D., Thorsnes, P. 2000
The reaction of housing prices to information on superfund sites: A semiparametric analysis of the Tacoma Washington MarketFomby, T. B.Carter Hill, R. eds. Applying Kernel and nonparametric estimation to economic topics: Advances in econometricsJAI PressStamford, ConnGoogle Scholar
Meese, R., Wallace, N.E. 1991Nonparametric estimation of dynamic Hedonic price models and the construction of residential housing pricesJournal of the American Real Estate and Urban Economics Association19308332CrossRefGoogle Scholar Michaels, R.G., Kerry Smith, V. 1990Market segmentation and valuing amenities with Hedonic models: The case of hazardous waste sitesJournal of Urban Economics28223242CrossRefGoogle Scholar Olson, M., Zeckhauser, R. 1970The efficient production of external economiesAmerican Review60512517Google Scholar Pargal, S., Wheeler, D. 1996Informal regulation of industrial pollution in developing countries: Evidence from IndonesiaJournal of Political Economy10413141327CrossRefGoogle Scholar
Pennsylvania Department of Environmental Protection. (2001). Efacts. At http://www.dep.state. pa.us/efacts/.
Ridker, R.G., Henning, J.A. 1967The determinants of residential property values with special reference to air pollutionReview of Economics and Statistics49246257CrossRefGoogle Scholar Rosen, S. 1974Hedonic prices and implicit markets: Product differentiation in pure competitionJournal of Political Economy823455CrossRefGoogle Scholar Rosenbaum, P.R., Rubin, D.B. 1983The central role of the propensity score in observational studies for causal effectsBiometrika704155CrossRefGoogle Scholar Rosenbaum, P.R., Rubin, D.B. 1984Reducing bias in observational studies using subclassification on the propensity scoreJournal of the American Statistical Association79516524CrossRefGoogle Scholar Rosenbaum, P.R., Rubin, D.B. 1985Constructing a control group using multivariate matched sampling methods that incorporate the propensity scoreAmerican Statistician393338CrossRefGoogle Scholar Slovic, P. 1987Perception of risk”Science236280285Google Scholar Smith, V.K., Huang, J.-C. 1995Can markets value air quality? A Meta-analysis of Hedonic property value modelsJournal of Political Economy103209227CrossRefGoogle Scholar
United Nations. (1992). Agenda 21. At http://www.unep.org/Documents/.
U.S. General Accounting Office. (1994). Toxic substances: Status of EPA’s efforts to reduce toxic releases. Report GAO/RCED-94-207.Google Scholar
Viscusi, W.K. 1993The value of risks to life and healthJournal of Economic Literature3119121946Google Scholar
© Springer Science+Business Media, LLC 2006