The effect of seismic hazard risk information on property prices: Evidence from a spatial regression discontinuity design

• We investigate the effect of seismic hazard risk information on apartment prices.
• A two-dimensional regression discontinuity design is used to identify the causal effect.
• The prices of apartments in safe zones are significantly higher than those in unsafe zones on average.
• The impact of risk information is not significant for newly built apartments.

In this paper, we utilize a spatial two-dimensional regression discontinuity (RD) design to study how Tokyo's property market evaluates information on seismic hazard risk. This approach is superior to the conventional one-dimensional RD design as it is able to account for spatially heterogeneous treatment effects and reduce small-sample biases. Our data consists of residential property transactions from the 23-ward area of Tokyo. Our results show that the unit prices of residential properties in low-risk zones were between 13,970–17,380 JPY higher than those in high-risk zones depending on the type of seismic hazard risk. In addition, we find that information on seismic hazard risk does not significantly affect the prices of newly constructed apartments, which are more resistant to earthquake damage than older residences.