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Bounds, Benefits, and Bad Air: Welfare Impacts of Pollution Alerts

Author

Listed:
  • Michael L. Anderson
  • Minwoo Hyun
  • Jaecheol Lee

Abstract

Though air-quality alert systems (AQAS) cover more than 1.7 billion people worldwide, there has been little welfare analysis of these systems. This paper presents a theoretical framework for deriving lower bounds on the net benefits of an AQAS and applies it to a South Korean system currently covering over 51 million people. Estimating a regression discontinuity design, we find that an alert issuance reduced youth respiratory expenditures by 30% and adult cardiovascular expenditures by 23%. The overall system reduced externalized health expenditures by 28.6 million dollars during 2016–2017, with a minimum benefit-cost ratio of 7.1:1. Including dynamic impacts of alerts increases the minimum benefits (benefit-cost ratio) to 36.7 million dollars (9.2:1). Our findings imply that the AQAS generates significant net benefits and suggests that manipulation of air quality data, which has been observed in other contexts, may negatively impact social welfare.

Suggested Citation

  • Michael L. Anderson & Minwoo Hyun & Jaecheol Lee, 2022. "Bounds, Benefits, and Bad Air: Welfare Impacts of Pollution Alerts," NBER Working Papers 29637, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29637
    Note: CH EEE EH LE PE
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    File URL: http://www.nber.org/papers/w29637.pdf
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    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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