Does the Salience of Climate-Related Risk Affect Asset Prices? (Revise and resubmit at the Journal of Financial and Quantitative Analysis) Available at SSRN
Using regression discontinuity and difference-in-discontinuities designs to compare prices of California homes across a new wildfire risk zone boundary, I identify a null local effect. In contrast, difference-in-differences panel estimates indicate that prices of homes newly assigned to a riskier zone drop by 2.5% on average. Both findings are consistent with actual wildfire risk, which is continuous at the boundary but higher on average inside a riskier zone. These findings suggest that households update their risk beliefs in response to re-zoning but do not respond to the increased salience of risk arising from the new risk zone.
Road Pricing: Travel Behavior and Public Support with Alice Ciccone and Gøril Andreassen. CESifo Working Paper No. 11867
We conduct a large-scale randomized controlled trial to examine the effects of time- and location-specific, distance-based road pricing on travel behavior and driving externalities. Using financial incentives and a smartphone app that automatically tracks participants' travel behavior across different modes, we find that road pricing reduces driving externalities by 5.3%, implying a price elasticity of -0.07 to -0.15 for the external costs of driving. Our findings suggest that drivers of battery-electric vehicles (BEVs) are much less responsive to road pricing than drivers of non-BEVs. Furthermore, we find that providing information on the expected benefits of road pricing enhances public support for such policies, whereas experience with road pricing has little impact.
Cloudy Judgments: Weather, Behavioral Bias, and Home Prices with Andreas E. Eriksen. Housing Lab Working Paper No. 2025-2
Economic decisions involving durable goods often require households to assess value and long-term utility across future states of the world. While many studies document that such decisions can be shaped by behavioral biases, less is known about when in the decision-making process individuals are most vulnerable. Using high-frequency data from the housing market, we investigate how the timing of transient environmental factors influences expectations about future utility. We find that cloud cover on the days of open houses significantly reduces sales prices, while it has no measurable impact during the purchase stage. Furthermore, we find no evidence that cloud cover influences buyer interest, such as attendance at showings or the number of offers submitted. The results are consistent with an attribute salience mechanism, in which temporary environmental cues like sunlight shape what buyers notice or attend to when forming their initial valuation. While mood effects may contribute, we find little evidence of projection bias, suggesting that perceptual biases, rather than forecast errors, drive the observed pricing effects. The findings underscore the importance of early-stage perception in asset valuation and suggest that behavioral distortions can arise even when incentives for rationality are strong.
Labor Market Impacts of the Green Transition: Evidence from a Contraction in the Oil Industry with Elisabeth Isaksen and Maria Nareklishvili. CESifo Working Paper No. 12057
The transition to a low-carbon economy requires a contraction of fossil fuel sectors, raising questions about the labor market costs of reallocation. We study the 2014 oil price shock as a natural experiment to examine the contraction of Norway’s oil industry. Using matched employer–employee data, we estimate long-run effects on earnings and employment using two complementary approaches. A difference-in-differences design shows moderate losses for all oil workers, while an event study reveals substantially larger and more persistent losses among displaced workers—up to 10% in earnings and 5% in employment nine years after displacement, especially for those with lower educational attainment. Although few displaced workers transition into green jobs, they are equally likely to enter green and brown (non-oil) sectors when accounting for the size of each destination sector. Earnings losses are larger for those entering green jobs rather than brown (non-oil) jobs, but smaller than for those entering other sectors. Decomposition results indicate that differences in establishment wage premiums—rather than skill mismatch—explain most of the observed gaps.
Sticky Asset Prices with Martin Schmalz and Dag Einar Sommervoll. Available at SSRN
We exploit an unexpected, geographically confined, and persistent increase in residential electricity prices to test whether real estate prices adjust quickly to their new fundamental value or whether they are downward sticky. We find that home prices in treated areas fall by 4.0-6.7% following the shock compared to controls, while sales volume declines by 5.7-10.0%. The drop in volume is driven by fewer listings, longer time-on-market, and increased unsold inventory-patterns consistent with downward price rigidity. We show that owners of houses whose market price falls below the outstanding mortgage and those who would realize a nominal loss are significantly less likely to sell and are more reluctant to lower prices. We conclude that housing prices are sticky, and discuss implications for macro models and for household mobility.