It’s no surprise that the homes abutting a freeway are a bit cheaper than similar homes with a buffer from the noise and hubbub. A recent paper, The Traffic Noise Externality: Costs, Incidence and Policy Implications was clever in using the construction of sound barrier walls to calculate the markets preference for a home protected by the wall versus one that was not.
The authors come up with a figure of 6.8%, which in itself is not as crucial as the acknowledgment that a public goods project, such as erecting a barrier wall, uniformly corrects the imposition of a busy road across a blanket geographic area. There is a market for public goods. A consistent, non-exclusionary response to a public goal reflected in the impassionate exchange of cash for homes.
The impact of the wall’s benefit, or the detriment of a noisy road, is reflected in the nearby neighborhood. There are other impacts resulting from the existence of the road and its location. It allows people to get to jobs. It might be an emergency route to a hospital where people object to the use of sirens. Buses might run off the road and so on. For that reason the net effect of the road is best taken as a package with the ability to divvy out and assess the pro’s and cons as refelcted in the surrounding land values.
To make a jump and try to use changes in house prices to make a meaningful observation of the traffic composition is a stretch. To extrapolate the value of home price change and reflect that back onto individual cars driving down that road, as the authors of The Traffic Noise Externality simply don’t follow me. It seems it would be a categorization problem.
Home Economics 