Working Paper: CEPR ID: DP16272
Authors: Claudia Custodio; Dragana Cvijanovic; Moritz Wiedemann
Abstract: This paper estimates the impact of opioid abuse on real estate prices. We exploit the variation in opioid prescriptions induced by the staggered passage of state laws intending to limit the abuse of opioids. We document a long-term negative relationship between opioid prescriptions and residential real estate prices. For a one standard deviation change in prescriptions we find a 1.36 percentage points change in home values over the following 5 years. We also estimate a positive increase in home prices of 0.54 and 0.91 percentage points respectively in the first and second years following the passage of these laws. One im- portant factor driving this relationship are changes in mortgage delinquency rates. Overall, our results are consistent with opioid abuse having significant long lasting negative economic effects that are mitigated if opioid supply is limited.
Keywords: opioid; prescription; opioids; real estate prices
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Opioid prescriptions (L42) | Residential real estate prices (R31) |
| State laws limiting opioid prescriptions (Z28) | Residential real estate prices (R31) |
| Opioid prescriptions (L42) | Mortgage delinquency rates (G21) |
| Mortgage delinquency rates (G21) | Residential real estate prices (R31) |
| Lagged opioid prescriptions (I12) | Mortgage delinquency rates (G21) |
| Opioid abuse (I12) | Residential real estate prices (R31) |
| Economic conditions prior to laws' passage (N41) | Effectiveness of laws on house prices (K25) |