In Regulatory Reform and Labor Markets , edited by James Peoples. Kluwer Academic Publishers, 1997. Results suggest that using federally-mandated regulations to isolate exogenous shifts in the supply of air quality leads to more credible and reliable estimates of the capitalization of air quality into housing values. Chay finds that regulation-induced declines in air pollution are capitalized into higher home values suggesting that individuals value clean air. In addition, the estimated housing price gradients vary substantially across demographic groups, with the less-educated and blacks facing steeper gradients.
Preliminary results suggest that reductions in air pollution result in lowered mortality rates.
Chay has also made progress on work concerning the identification and estimation of dynamic discrete process models. Many discrete economic phenomena exhibit substantial serial persistence over time in that an individual who has experienced a particular outcome in the past is more likely to experience that same outcome in the future than an individual who has not. Chay performs an empirical evaluation of several different approaches to the problem of separately identifying and estimating the underlying causes of this persistence, which is one of the more difficult problems in econometric inference. The focus is and has been on developing methods of emerging importance in analyzing real s ocial science problems. Model formulations and applications include dynamic discrete time models, censored data, order and unordered multinomial data, nonparametric estimation and inference and statistical model selection.