Dr. Luke Fitzpatrick
The Economics Seminar series presents Dr. Luke Fitzpatrick discussing “Surface Coal Mines in Housing Markets” on March 3 at 3 p.m. in Bentley Annex 302.
Fitzpatrick is Assistant Professor of Economics at Ohio University.
Abstract: Hedonic studies that estimate house price impacts of environmental disamenities can generate substantially different conclusions based on the size of the treatment buffer employed. We demonstrate this fact by combining real estate transaction data on single family homes from two Appalachian housing markets, and GIS data on surface mining operations. Given the lack of theoretical guidance as to how near to a mine a home must sit in order to be considered “treated,” we employ a leave-one-out cross validation exercise to identify the distance buffers that markets implicitly demonstrate. We identify treatment buffers of comparable size to previous studies of hedonic estimates, and do so without making any ad hoc assumptions about which homes are treated. Results suggest discounts of between 8 and 12 percent for treated homes.
We also using matching techniques to recover the average capitalized value of proximate surface mines by comparing the sale price of homes that lie within a treatment buffer to observationally similar ones that lie beyond the treatment buffer. By repeating this process for multiple different buffer sizes, we construct a gradient of average treatment effects on the treated for each market. In general, the matching technique suggest large discounts (between $8,000 and $10,000) for homes that lie within three kilometers of a coal mine.
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