Center for Environmental Policy and Administration

Reducing Environmental Risks By Information Disclosure: The Evidence in Residential Lead-Based Paint Disclosure

Author:Hyunhoe Bae
Date: September 2009
Link:lead paint paper_web.pdf

There has been a new emergence of information disclosure policy as environmental regulation. However, existing empirical evidence has yet to demonstrate the effectiveness of this approach to reduce environmental risks, and even those findings are limited to certain applications. This study evaluates the disclosure rule of the residential lead paint hazard (Title X) in 1996, which is one of the prominent examples of environmental disclosure; however it has been under-investigated in terms of its impact on information recipients ‘behavior. Using the national American Housing Survey, this study examines the impact of Title X on home buyers/owners’ associated behaviors – test for lead paint and maintenance of paint surface. In addition, this study explores one of the expected key roles of the information disclosure strategy, that is, the function to fill the existing information gap, by examining whether the policy effect was larger on the groups with less information power. The findings show that Title X increases the propensity of tests for lead during transactions and decreases the probability of risky peeling paint conditions in old homes. In addition, the policy effect on the test behavior was larger with low-income group who was supposed to have less information/knowledge on the risks, implying its intended role of supporting the target “less-information” groups. The analyses on maintenance behavior also found a spillover effect of the policy on the houses that did not go through the market, indicating a diffusion of information produced by the policy beyond its designated channel.
Center for Environmental Policy and Administration
The Maxwell School, Syracuse University
Revised 01/15/2010 19:17:31