Land Markets and Terrorism: Uncovering Perceptions of Risk by Examining Land Price Changes Following 9/11

The question addressed in this chapter is, “Do individuals act the same way when they buy houses as they do when they answer surveys?” and the results presented that they do not. In fact, the results are consistent with the hypothesis that homebuyers’ perception of risk is unchanged in the wake of the 9/11 attacks. No significant change was measured in prices or sales volume in neighborhoods of prominent potential targets of terrorist attack. There is striking evidence of the ability of markets to price small probability risks – the type of soil, and its underlying performance during earthquakes, is show to be priced in one study. This example of markets “discovering” pricing indicates that the lack of any significant response is not likely the result of market participants being ignorant of the effects of even small changes in the likelihood of damage from terrorism. It is more likely that consumers do not believe that a second attack of the scale of the attacks on New York and Washington, DC will occur. The apparent conflict between the survey discussed in the chapter, the inordinate media coverage of terrorism, and the absence of any manifest pricing of additional risk is best viewed as reason to use market-based transaction data. This capitalization of expectation represents an advantage over polls or surveys in ascertaining consumer beliefs, because transactions are costly whereas survey responses are not.

• Availability:
  • Find a library where document is available. Order URL: http://www.e-elgar-environment.com/Bookentry_Main.lasso?id=3783
• Corporate Authors:

  Edward Elgar Publishers

  William Pratt House, 9 Dewey Court
  Northampton, MA  United States  01060-3815
• Authors:
  • Redfearn, Christian L
• Publication Date: 2005

Language

• English

Media Info

• Media Type: Print
• Features: References; Tables;
• Pagination: pp 152-169
• Monograph Title: The Economic Impacts of Terrorist Attacks

Subject/Index Terms

• TRT Terms: Consumer preferences; Dwellings; Land areas; Land values; Real estate industry; Real property; Terrorism
• Identifier Terms: Terrorist attacks of September 11, 2001
• Uncontrolled Terms: Terrorist incidents
• Subject Areas: Economics; Highways; Planning and Forecasting; Public Transportation; Safety and Human Factors; Security and Emergencies; Society; Terminals and Facilities; I10: Economics and Administration; I83: Accidents and the Human Factor;

Filing Info

• Accession Number: 01023101
• Record Type: Publication
• ISBN: 1845423011
• Files: TRIS
• Created Date: Apr 25 2006 2:09PM