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Inequality, information failures, and air pollution

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  • Hausman, Catherine
  • Stolper, Samuel

Abstract

Research spanning several disciplines has repeatedly documented disproportionate pollution exposure in low-income communities and communities of color. Among the various proposed causes of this pattern, those that have received the most attention are income inequality, discrimination, and firm costs (of inputs and regulatory compliance). We argue that an additional channel – information – is likely to play an important role in generating disparities in pollution exposure. We present multiple reasons for a tendency to underestimate pollution burdens. Using a model of housing choice, we then derive conditions under which “hidden” pollution leads to an inequality — even when all households face the same lack of information. This inequality arises when households sort according to known pollution and other disamenities, which we show are positively correlated with hidden pollution. To help bridge the gap between environmental justice and economics, we discuss the relationship between hidden information and three different distributional measures: exposure to pollution; exposure to hidden pollution; and welfare loss due to hidden pollution.

Suggested Citation

  • Hausman, Catherine & Stolper, Samuel, 2021. "Inequality, information failures, and air pollution," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:jeeman:v:110:y:2021:i:c:s009506962100108x
    DOI: 10.1016/j.jeem.2021.102552
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    7. Komisarow, Sarah & Pakhtigian, Emily L., 2022. "Are power plant closures a breath of fresh air? Local air quality and school absences," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    8. Camille Salesse, 2022. "Inequality in exposure to air pollution in France: bringing pollutant cocktails into the picture," CEE-M Working Papers hal-03882438, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    9. Pham, Linh & Roach, Travis, 2023. "Particulate pollution and learning," Economics of Education Review, Elsevier, vol. 92(C).
    10. Bradt, Jacob T. & Kousky, Carolyn & Wing, Oliver E.J., 2021. "Voluntary purchases and adverse selection in the market for flood insurance," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    11. Baoxi Li & De Xiao, 2021. "The Impact of Income Inequality on Subjective Environmental Pollution: Individual Evidence from China," IJERPH, MDPI, vol. 18(15), pages 1-26, July.
    12. Campa, Pamela & Muehlenbachs, Lucija, 2021. "Addressing Environmental Justice through In-Kind Court Settlements," CEPR Discussion Papers 16293, C.E.P.R. Discussion Papers.
    13. Joakim Weill, 2023. "Flood Risk Mapping and the Distributional Impacts of Climate Information," Working Papers 2023.10, FAERE - French Association of Environmental and Resource Economists.
    14. Han, Xianru, 2023. "The Distributional Effects of Tighter Regulations: New Evidence from the Sugarcane Burning in Florida," 2023 Annual Meeting, July 23-25, Washington D.C. 335926, Agricultural and Applied Economics Association.
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    More about this item

    Keywords

    Environmental justice; Pollution; Information; Housing demand; Equity; Inequality;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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