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The effect of clean air on pharmaceutical expenditures

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  • Rohlf, Alexander
  • Holub, Felix
  • Koch, Nicolas
  • Ritter, Nolan

Abstract

Airborne emissions are detrimental to health. Low emission zones (LEZs) that restrict pollution-intensive vehicles from entering are popular measures to curb local emissions such as particulate matter. We evaluate how LEZs impact defensive pharmaceutical expenditures. To this end, we use the complete medical histories of 2.7M individuals insured with Germany’s largest public health insurer AOK. We identify causal effects exploiting the quasi-experimental, staggered introduction of LEZs in 49 cities. We find that LEZs reduce annual pharmaceutical expenditures for heart and respiratory diseases by 15.8M€, representing a significant fraction of policy costs.

Suggested Citation

  • Rohlf, Alexander & Holub, Felix & Koch, Nicolas & Ritter, Nolan, 2020. "The effect of clean air on pharmaceutical expenditures," Economics Letters, Elsevier, vol. 192(C).
    • Handle: RePEc:eee:ecolet:v:192:y:2020:i:c:s0165176520301580
    DOI: 10.1016/j.econlet.2020.109221
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    References listed on IDEAS

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    1. Olivier Deschênes & Michael Greenstone & Joseph S. Shapiro, 2017. "Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program," American Economic Review, American Economic Association, vol. 107(10), pages 2958-2989, October.
    2. Gehrsitz, Markus, 2017. "The effect of low emission zones on air pollution and infant health," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 121-144.
    3. Pestel, Nico & Wozny, Florian, 2019. "Low Emission Zones for Better Health: Evidence from German Hospitals," IZA Discussion Papers 12545, Institute of Labor Economics (IZA).
    4. Andrew Goodman-Bacon, 2018. "Difference-in-Differences with Variation in Treatment Timing," NBER Working Papers 25018, National Bureau of Economic Research, Inc.
    5. Hendrik Wolff, 2014. "Keep Your Clunker in the Suburb: Low‐emission Zones and Adoption of Green Vehicles," Economic Journal, Royal Economic Society, vol. 124(578), pages 481-512, August.
    6. Kurt Schmidheiny & Sebastian Siegloch, 2023. "On event studies and distributed‐lags in two‐way fixed effects models: Identification, equivalence, and generalization," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(5), pages 695-713, August.
    7. Joshua Graff Zivin & Matthew Neidell, 2013. "Environment, Health, and Human Capital," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 689-730, September.
    8. Austin M. Williams & Daniel J. Phaneuf, 2019. "The Morbidity Costs of Air Pollution: Evidence from Spending on Chronic Respiratory Conditions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 571-603, October.
    9. Wolff, Hendrik, 2014. "Keep Your Clunker in the Suburb: Low Emission Zones and Adoption of Green Vehicles," IZA Discussion Papers 8180, Institute of Labor Economics (IZA).
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    Cited by:

    1. Pestel, Nico & Wozny, Florian, 2021. "Health effects of Low Emission Zones: Evidence from German hospitals," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    2. Luis Sarmiento & Nicole Wägner & Aleksandar Zaklan, 2021. "Effectiveness, Spillovers, and Well-Being Effects of Driving Restriction Policies," Discussion Papers of DIW Berlin 1947, DIW Berlin, German Institute for Economic Research.
    3. NISHITATENO Shuhei & Paul BURKE, 2022. "Effects of Low Emission Zones on Air Quality, New Vehicle Registrations, and Birthweights: Evidence from Japan," Discussion papers 22109, Research Institute of Economy, Trade and Industry (RIETI).
    4. Klauber, Hannah & Holub, Felix & Koch, Nicolas & Pestel, Nico & Ritter, Nolan & Rohlf, Alexander, 2021. "Killing Prescriptions Softly: Low Emission Zones and Child Health from Birth to School," IZA Discussion Papers 14376, Institute of Labor Economics (IZA).
    5. Beshir, H.A.; & Fichera, E.;, 2022. "“And Breathe Normally†: The Low Emission Zone impacts on health and well-being in England," Health, Econometrics and Data Group (HEDG) Working Papers 22/09, HEDG, c/o Department of Economics, University of York.
    6. Gruhl, Henri & Volkhausen, Nicolas & Pestel, Nico & aus dem Moore, Nils, 2022. "Air pollution and the housing market: Evidence from Germany's Low Emission Zones," Ruhr Economic Papers 977, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    Air pollution; Driving ban; Quasi-experiment; Pharmaceutical expenditures; Health;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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