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NCJRS Abstract

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NCJ Number: 120806 Find in a Library
Title: Crime and Racial Composition in Contiguous Communities as Negative Externalities: Prejudiced Households' Evaluation of Crime Rate and Segregation Nearby Reduces Housing Values and Tax Revenues
Journal: American Journal of Economics and Sociology  Volume:47  Issue:2  Dated:(April 1988)  Pages:177-193
Author(s): J D Burnell
Date Published: 1988
Page Count: 17
Type: Research (Theoretical)
Format: Article
Language: English
Country: United States of America
Annotation: This analysis considers how circumstances such as crime and racial composition in surrounding communities can affect a household's utility and therefore play a role in the household's residential location decision.
Abstract: The theory of the household's valuation of neighborhood amenities is expanded, using a housing value equation, to show how the household's valuation of amenities is affected by amenities in surrounding areas. An empirical model using data from 71 suburban communities in the Chicago area is specified to measure the simultaneous interaction among housing values, crime, and police efforts. A revenue equation is also included to determine how the household's valuation of crime and racial composition affects the community's revenue-raising ability. Empirical results indicate that crime and racial composition in the household's community and in surrounding communities have a statistically significant effect on housing values. While the magnitude of the effect is small, the results indicate that households consider the crime rate and racial composition of surrounding communities as negative externalities. The results also suggest that an increased black presence in the community adversely affects housing values. 20 references, 3 tables.
Main Term(s): Suburban area studies
Index Term(s): Crime rate studies; Illinois; Racial discrimination
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