College of Business and Economics
The existence of homeowner preferences - speciﬁcally homeowner preferences for neighbors -is fundamental to economic models of sorting. This paper investigates whether or not the terrorist attacks of September 11, 2001 (9/11) impacted local preferences for Arab neighbors. We test for changes in preferences using a diﬀerences-in-diﬀerences approach in a hedonic pricing model. Relative to sales before 9/11, we ﬁnd properties within 0.1 miles of an Arab homeowner sold at a 1.4% discount in the 180 days after 9/11. The results are robust to a number of speciﬁcations including time horizon, event date, distance, time, alternative ethnic groups, and the presence of nearby mosques. Previous research has shown price eﬀects at neighborhood levels but has not identiﬁed eﬀects at the micro or individual property level, and for good reason: most transaction level data sets do not include ethnic identiﬁers. Applying methods from the machine learning and biostatistics literature, we develop a binomial classiﬁer using a supervised learning algorithm and identify Arab homeowners based on the name of the buyer. We train the binomial classiﬁer using names from Summer Olympic Rosters for 221 countries during the years 1948-2012. We demonstrate the ﬂexibility of our methodology and perform an interesting counterfactual by identifying Hispanic and Asian homeowners in the data; unlike the statistically signiﬁcant results for Arab homeowners, we ﬁnd no meaningful results for Hispanic and Asian homeowners following 9/11.
Digital Commons Citation
Nowak, Adam and Sayago-Gomez, Juan, "Homeowner Preferences after September 11th, a Microdata Approach" (2017). Economics Faculty Working Papers Series. 28.
Published as: Nowak, Adam, and Juan Sayago-Gomez. "Homeowner preferences after September 11th, a microdata approach." Regional Science and Urban Economics 70 (2018): 330-351.