What effect does gun-related violence have on the attractiveness of a residential area? The case of Stockholm, Sweden

Abstract

PurposeThis study aims to analyse the effect of gun-related violence on housing values, controlling for the area's crime levels and locational factors. Previous studies that aimed to find a causal connection between crime and housing values used instrument variables to solve the endogeneity problem. Here, the authors have instead been able to take advantage of the fact that shootings have occurred in random time and space. This has made it possible to estimate models to create windows around the shooting (event) and to estimate the causal effects of the shootings. Thus, the authors aim to contribute to the regression discontinuity design method in this context to estimate the short-term effects.Design/methodology/approachUsing the regression discontinuity design method, the authors can estimate the short-term effects of shootings.FindingsFindings from the analysis indicate that shootings directly affect those who are impacted by shootings and indirectly affect the environments where shootings occur. The indirect effect of shootings is momentary as it is capitalised directly in housing values in the immediate area. The effect also appears to be relatively long-term and persistent as housing values have not returned to the price level before the shooting 100–200 days after the shooting. The capitalisation effect is higher the closer one gets to the central parts of the city. On the other hand, the capitalisation effect is not higher or lower in areas with a higher crime rate per capita.Originality/valueThe article contributes to the previous literature in several ways. First and foremost, it provides an explicit analysis of shootings in built-up areas and their hypothesised effect on property prices through the impact on attractiveness and perceived safety. As far as the authors know, no study has analysed this issue on the international level or in Sweden. In this way, the authors aim to develop a study that can provide critical knowledge about one of the adverse effects of shootings. The authors also contribute to the literature by utilising unique data material, which allows the authors to merge information from the police about the exact location of shootings in the Stockholm area with data on sales of apartments in the same residential areas. In addition to the exact location of the shootings (coordinates), the authors also have access to data about whether the shootings led to injuries or deaths. Thus, the authors have separated the effect of shootings and fatal shootings, which has not been done before. Finally, the authors set out to highlight the results as a contribution to the debate on shootings.