Abstract: This paper investigates the extent to which short-term fluctuations in air quality affect housing prices, shedding light on the behavioral response of housing market participants to temporary environmental conditions. Standard economic theory suggests that forward-looking, rational individuals should base their decisions on long-term air quality expectations; thus, housing prices should not respond to transient changes in pollution. If prices do respond to temporary changes in pollution levels, this would indicate that myopic behavior on the part of buyers and sellers. Using detailed data on residential real estate transactions and pollution levels from South Korea between 2015 and early 2020, I show that temporary increases in air pollution significantly reduce housing prices. The effect is strongest for visible pollutants such as particulate matter (PM10). These findings suggest that individuals are influenced by the salience of environmental conditions at the time of property visits, with the visual impact of pollution playing a critical role in shaping real estate market outcomes.
Cheng, C., Deck, C., & Kim, W. (2023). Collective Action and Intra-Group Conflict: An Experiment. Defence and Peace Economics, 1-16.
Kim, Wonjong (2020) Single-Person Households and Crime, Korean Journal of Law and Economics,17(1): 137-160 (In Korean)
Kim, Duol and Wonjong Kim (2019) Nulla Poena Sine Lege: A Quantitative Analysis on Scope of Crimes, Level of Punishments, and Proportionality between Punishments in Korean Laws, The Justice, 170(3) (In Korean)Â
Behaviors in Homeowner Insurance Claim and Maintenance Against Storms (with Cary Deck, Amanda Ross)
The Impact of Pollution on Criminal Behavior (with Michael Price, Amanda Ross)