Outside the Beltway

Megan’s Law and Property Prices

· Wednesday, July 12, 2006 · 2 comments

Now that most localities have registered sex offender lists due to the body of legislation that has come to be Megan’s Law, some research from the NBER points out that if such an offender moves into your neighborhood, the price of your house will take a hit.

The authors estimate that a single offender depresses property values in the immediate vicinity by $4,500 to $5,500 per home. Altogether, the presence of sex offenders has shrunk property values in the County [Mecklenburg] by about $58 million.

Assuming that individuals are reacting to the increased probability of being victimized by a neighboring sex offender, the authors estimate that the victimization costs of sex offenses total more than $1 million per case. That is far in excess of estimates by economists cited in the criminal justice literature. The authors note that this large figure could be driven partially by individuals overestimating the probability of victimization, or by other costs associated with living near a sex offender (such not allowing children to play outside). Either way, Linden and Rockoff conclude there is a great willingness in the public to pay for policies that would shield residents from sexual offenders.

I can believe the “overestimation of probabilities of victimization” as most people are pretty bad at estimating probabilities.

FILED UNDER: Economics and Business, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. M. Simon says:
    Wednesday, 12 July 2006 at 20:12

    Most sex offences are done by family members. Do family members lower property values?

    Of course by making the registries public the offenders go underground. So back where we started.

    Or perhaps the idea is the offenders will be forced to live under bridges and beg for a living.

    Who comes up with these ideas?

  2. Steve Verdon says:
    Thursday, 13 July 2006 at 01:06

    Actually, I think the statistics breakdown to 50% known to the victim (friend of the family, family member, etc.) and 50% unknown to the victim.

    Also, the idea is that to be forewarned is to be forearmed. Also, if they “go underground” I believe that is a violation of their parole and sufficient grounds to return them to prison.

    Aside from locking them up forever or just killing them I don’t see a solution that doesn’t have its downsides.

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