TY - JOUR
T1 - Earthquake risk and housing prices in Japan
T2 - Evidence before and after massive earthquakes
AU - Naoi, Michio
AU - Seko, Miki
AU - Sumita, Kazuto
N1 - Funding Information:
We are grateful to the National Research Institute for Earth Science and Disaster Prevention (NIED) for generously providing us with the data on earthquake hazard information. We also thank Richard Arnott, Eric Hanushek, Dwight Jaffee, Charles Leung, Colin McKenzie, Tsunao Okumura, John Quigley, Tim Riddiough, James Shilling, Jay Weiser, Jiro Yoshida, two anonymous referees and participants at the Macro, Real Estate and Public Policy Workshop, the 12th AsRES Annual Conference and the International Conference on Economic Analysis and Policy Evaluation Using Panel Data for their helpful comments. Financial support from the Japan Economic Research Foundation is gratefully acknowledged. The first author (Michio Naoi) acknowledges a Grant-in-Aid (# 19730183 ) for Young Scientists from the Ministry of Education, Culture, Sports, Science and Technology . The second and third authors (Miki Seko and Kazuto Sumita) acknowledge a Grant-in-Aid (# 19530157 ) for Scientific Research (C) from the Ministry of Education Culture, Sports, Science and Technology .
PY - 2009/11
Y1 - 2009/11
N2 - The hedonic pricing approach is used to examine whether homeowners and/or renters alter their subjective assessments of earthquake risks after massive earthquakes. Using nation-wide household panel data coupled with earthquake hazard information and records of observed earthquakes, we find that there are some modifications of individuals' assessments of earthquake risk in both cases. We have carefully taken into consideration the bias stemming from the use of objective risk variables as a proxy for individual risk assessments. Our results suggest that the price discount from locating within a quake-prone area is significantly larger soon after earthquake events than beforehand. We argue that the most likely interpretation for this result is that households tend to underestimate earthquake risk if there has not been a recent occurrence.
AB - The hedonic pricing approach is used to examine whether homeowners and/or renters alter their subjective assessments of earthquake risks after massive earthquakes. Using nation-wide household panel data coupled with earthquake hazard information and records of observed earthquakes, we find that there are some modifications of individuals' assessments of earthquake risk in both cases. We have carefully taken into consideration the bias stemming from the use of objective risk variables as a proxy for individual risk assessments. Our results suggest that the price discount from locating within a quake-prone area is significantly larger soon after earthquake events than beforehand. We argue that the most likely interpretation for this result is that households tend to underestimate earthquake risk if there has not been a recent occurrence.
KW - Earthquake risks
KW - Hedonic price model
KW - Panel data models
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U2 - 10.1016/j.regsciurbeco.2009.08.002
DO - 10.1016/j.regsciurbeco.2009.08.002
M3 - Article
AN - SCOPUS:70349804464
SN - 0166-0462
VL - 39
SP - 658
EP - 669
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
IS - 6
ER -