The marginal cost of mortality risk reduction: Evidence from housing markets

We provide the first evidence on the rate at which spatial variation in all-cause mortality risk is capitalized into US housing prices. Using a hedonic framework, we recover the annual implicit cost of a 0.1 percentage-point reduction in mortality risk among older Americans and find that this cost is less than $3453 for a 67 year old and decreasing with age to less than $629 for an 87 year old. These estimates, while similar to estimates from the market for health care, are far below comparable estimates from markets for labor and automobiles, suggesting that the housing market provides an alternative, substantially cheaper channel for reducing mortality risk. We find this conclusion to be robust to a wide range of econometric model specifications, including accounting for associated expenditures on property taxes and the physical and financial costs of moving.