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Stigma: The Psychology and Economics of Superfund

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This study documents the long-term impacts of Superfund cleanup on property values in communities neighboring prominent Superfund sites. To understand the impacts, one must integrate the psychology of risk perceptions and stigma with the economics of property values that capture those perceptions. The research specifically examines the sale prices of nearly 35,000 homes for up to a thirty-year period near six very large Superfund sites. To the authors' knowledge, no property value studies have examined sites in multiple areas with large property value losses over the length of time used here. The results they obtain for these very large sites are both surprising and inconsistent with most prior work. The principal result is it that, when cleanup is delayed for ten, fifteen, and even up to twenty years, the discounted present value of the cleanup is mostly lost, most likely because sites are stigmatized and the homes in the surrounding communities are shunned. The psychological model developed suggests that, for very large sites, expedited cleanup and simplifying the process to reduce the number of stigmatizing events that attract attention to sites would reduce property losses.

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Date Linked: 05/28/2009

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