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There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values From Megan's Laws
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Abstract
We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of sex offenders to exploit variation in the threat of crime within small homogenous groupings of homes, and we use the timing of sex offenders' arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders' locations that are extremely localized. Houses within a one-tenth mile area around the home of a sex offender fall by 4 percent on average (about 5,500).Wealsofindevidencethattheeffectvarieswithdistancewithinthisrange−−housesnexttoanoffendersellforabout12percentlesswhilethoseatenthofamileawayormoreshownodecline.Wecombineourwillingness−to−payestimateswithdataonsexualcrimesagainstneighborstoestimatethecoststovictimsofsexualoffenses.Weestimatecostsofover1 million per victim -- far in excess of estimates taken from the criminal justice literature. However, we cannot reject the alternative hypotheses that individuals overestimate the risk posed by offenders or view living near an offender as having costs exclusive of crime risk.