The Welfare Impacts of Large Urban Noise Reductions: Implications from Household Sorting in Vienna

Abstract

We develop a pure characteristics equilibrium sorting model to recover estimates of willingness to pay (WTP) for both marginal and non-marginal changes in urban noise exposure. Using data from Vienna, Austria, we provide several new insights in the urban noise literature. First, we demonstrate the importance of considering general equilibrium feedback effects following large changes in noise levels. We document impacts to residents in policy targeted and non-targeted locations due to changes in both noise and equilibrium prices. Second, we confirm evidence of the importance of noise thresholds with significant and increasing negative impacts associated with increases in area covered by high levels of noise at 50 dB and 60 dB thresholds, respectively. Finally, we use an equilibrium sorting model to predict new price patterns and welfare implications following hypothetical policy changes that alter the distribution and intensity of nighttime noise in Vienna and are relevant to other urban settings seeking to reduce noise levels. Our work additionally provides a roadmap for conducting similar equilibrium sorting work in data limited settings outside the U.S.