Heterogeneity in air pollution’s influence on health

This study utilizes Chinese micro-level data to analyze the effects of air pollution on respiratory diseases, while simultaneously accounting for endogeneity and nonlinear responses. Related past studies have primarily focused on air pollution’s linear effects. We find that air pollution increases the probability of respiratory diseases, and as pollution levels rise, the negative marginal costs intensify. Thus, not accounting for nonlinear responses underestimates the impacts of air pollution. In particular, we find very large marginal pollution effects on respiratory disease at high concentrations – e.g. moving to the 90th percentile of pollution levels from the 10th percentile leads to a 42.3% increase in Chinese respiratory diseases. Additional analysis reveals that the negative air pollution effects vary across different populations, which has implications for regulatory-policy design. These findings suggest that stricter pollution policies in developing countries have widespread health benefits in improving quality-of-life that exceed estimates extrapolated from developed-country studies.