Does Climate Change Affect Real Estate Prices? Only If You Believe In It
Open accessAbstract
This paper studies whether house prices reflect belief differences about climate change. We show that in an equilibrium model of housing choice in which agents derive utility from ownership in a neighborhood of similar agents, prices exhibit different elasticities to climate risk. We use comprehensive transaction data to relate prices to inundation projections of individual homes and measures of beliefs about climate change. We find that houses projected to be underwater in believer neighborhoods sell at a discount compared to houses in denier neighborhoods. Our results suggest that house prices reflect heterogeneity in beliefs about long-run climate change risks.
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Climate risks and market efficiency
Hong, H., Li, F. W., & Xu, J. (2019) · Journal of Econometrics · doi:10.1016/j.jeconom.2018.09.015 · Cited by 967 · see citing works
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The Importance of Climate Risks for Institutional Investors
Krueger, P., Sautner, Z., & Starks, L. T. (2020) · The Review of Financial Studies · doi:10.1093/rfs/hhz137 · Cited by 3,034 · see citing works
Climate Risk and Capital Structure
Ginglinger, E., & Moreau, Q. (2019) · SSRN Electronic Journal · doi:10.2139/ssrn.3327185 · Cited by 71 · see citing works
Sustainability Preferences Under Stress: Evidence from COVID-19
Döttling, R., & Kim, S. (2020) · SSRN Working Paper · doi:10.2139/ssrn.3656756 · Cited by 161 · see citing works
Measuring, mapping, and anticipating climate gentrification in Florida: Miami and Tampa case studies
Tedesco, M., Keenan, J. M., & Hultquist, C. (2022) · Cities · doi:10.1016/j.cities.2022.103991 · Cited by 18 · see citing works
- Authors
- Baldauf, M., Garlappi, L., & Yannelis, C.
- Affiliations
- University of British Columbia (CA)
- University of Chicago (US)
- Corresponding author
- Garlappi, Lorenzo
- Venue
- The Review of Financial Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 2020-02-14
- Volume
- 33
- Issue
- 3
- Pages
- 1256-1295
- ISSN
- 0893-9454 (ISSN-L)
- 1465-7368
- OpenAlex
- W2903751886
- Cited by
- 713
- References
- 1
- Citations by year
- 2026: 112 · 2025: 131 · 2024: 138 · 2023: 115 · 2022: 91 · 2021: 64 · 2020: 33 · 2019: 18 · 2018: 6 · 2017: 1 · 2012: 1
- FWCI
- 45.99
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Licence
- academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model (vor)
- Locations
- Review of Financial Studies (publishedVersion)
- SSRN Electronic Journal (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Funders
- Social Science and Humanities Research Council of Canada
- SSHRC
- National Science Foundation (ACI-1548562)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Housing Market and Economics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
- Social Sciences › Sociology and Political Science › Climate Change Communication and Perception
- Keywords
- climate change beliefs, housing prices, climate change denial, climate risk, housing choice, neighborhood similarity, heterogeneous beliefs
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