Essays on the Dynamics of Residential Sorting, Health, and Environmental Quality

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My dissertation combines the notion of residential sorting from Tiebout (1956) with Grossman’s (1972) concept of a health production function to develop a new empirical framework for investigating what individuals’

My dissertation combines the notion of residential sorting from Tiebout (1956) with Grossman’s (1972) concept of a health production function to develop a new empirical framework for investigating what individuals’ residential location choices reveal about their valuation of amenities, the welfare effects of climate change, the forces underlying environmental justice, and the value of a statistical life. Location

choices are affected by age, health, and financial constraints, and by exposure to local amenities that affect people’s health and longevity. Chapter 1 previews how I formalize this idea and investigate its empirical implications in three interrelated essays. Chapter 2 investigates interactions between health, the environment, and income. Seniors tend to move at higher rates after being diagnosed with new chronic medical conditions. While seniors generally tend to move to locations with less polluted air, those who have been diagnosed with respiratory conditions move to relatively more polluted locations. This counterintuitive pattern is reconciled by documenting that new diagnoses bring about increases in medical expenditures, thereby limiting disposable income that can be spent on housing. Relatively cheaper places tend to be more polluted, and higher exposure to pollution leaves seniors more vulnerable to future health shocks. In Chapter 3, I combine information about housing prices with estimates of location-specific effects on mortality to estimate the Value of a Statistical Life (VSL) for seniors - one of the most important statistics used to evaluate policies affecting mortality. Since local amenities correlate with causal mortality effects, but also provide utility independently, the difficulty in controlling for local amenities implies that my VSL estimates are best interpreted as bounds. Chapter 4 builds a new structural framework for evaluating spatially heterogeneous changes to local amenities. I estimate a dynamic model of location choice with a sample of 5.5 million seniors from 2001-2013. Their average annual willingness-to-pay to avoid future climate change in the United States under a “business as usual” scenario ranges from $962 for older, sicker groups who are more vulnerable to climate change’s negative effects on health to -$1,894 for younger, healthier groups, who value warmer winters and are relatively resilient.