Friday, April 19, 2013

A Problem with Assumptions

Just saw this working paper by some top folks on pricing negative pollution externalities. They find that as we might expect, the price of nearby housing declines when a new toxic waste-generating plant opens. However, the effects on housing values are only seen in the area nearest the plant, but the effect of the environmental damage can be seen on infants up to a mile away.

Do you know everything that's within a mile of your home?