Guns N’ Houses : On Gun Violence and Housing Prices in Sweden’s Metropolitan Areas

Abstract: This paper examines the impact of confirmed shootings on the attractiveness of a neighborhood, measured through local housing prices, in Sweden’s major metropolitan areas during 2016-2019. A novel difference-in-differences approach is proposed where control groups are selected from areas that will be exposed to shootings in the near future but have not yet been so, thus mitigating the problem from previous studies that shootings might be a result of underlying unobserved factors for the neighborhood. The results are inconclusive overall apart from Uppsala, where the estimate is negative and significant, indicating a 4.8 percent drop in nearby housing prices after a shooting. Multiple alternative specifications are used to test the robustness of the results. Overall, the negative estimate for Uppsala seems quite stable, whereas the estimated impact in other regions remains insignificant. One potential explanation could be that gun-violence is a rather new phenomena in Uppsala relative to the other regions, which could make the effect of a shooting in Uppsala more pronounced. A consideration for policy makers may then be that programs aiming to reduce gun-violence will have a larger economic impact in areas where shootings are a relatively new and arising problem.