Does Air Quality Matter? Evidence from the Housing Market

  • Chay K
  • Greenstone M
  • 217


    Mendeley users who have this article in their library.
  • 267


    Citations of this article.


We exploit the structure of the Clean Air Act to provide new evidence on the capitalization of total suspended particulates (TSPs) air pol- lution into housing values. This legislation imposes strict regulations on polluters in “nonattainment” counties, which are defined by con- centrations of TSPs that exceed a federally set ceiling. TSPs nonat- tainment status is associated with large reductions in TSPs pollution and increases in county-level housing prices. When nonattainment status is used as an instrumental variable for TSPs, we find that the elasticity of housing values with respect to particulates concentrations ranges from Ϫ0.20 to Ϫ0.35. These estimates of the average marginal willingness to pay for clean air are robust to quasi-experimental re- gression discontinuity and matching specification tests. Further, they are far less sensitive to model specification than cross-sectional and fixed-effects estimates, which occasionally have the “perverse” sign. We also find modest evidence that the marginal benefit of reductions of TSPs is lower in communities with relatively high pollution levels,

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Get full text


  • Kenneth Y. Chay

  • Michael Greenstone

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free