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Subjective Well-Being and Air Quality in Germany

  • Maike Schmitt

This paper analyses the relation between air quality and subjective well-being in Germany. Life Satisfaction (LS) data from the German Socio-Economic Panel Study (SOEP) is connected with daily county pollution in terms of carbon monoxide (CO), nitrogen dioxide (NO2) and ozone (O3) from 1998 to 2008. The assumed microeconometric happiness function is estimated considering individual time invariant effects. It is observed that O3 has a significant negative impact on life satisfaction. The estimated influence of current CO as well as NO2 is not significant. Moreover, I found that LS of people with environmental worries is more affected by ozone pollution. This was not the case for people with a bad health status. Using the marginal rate of substitution between income and air pollution, it is calculated that an increase of one µg/m3 in daily average county O3 has to be compensated by an increase of EUR11.33 in monthly net household income to hold an average individual's LS constant.

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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 541.

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Length: 24 p.
Date of creation: 2013
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp541
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  1. Simon Luechinger, 2009. "Valuing Air Quality Using the Life Satisfaction Approach," Economic Journal, Royal Economic Society, vol. 119(536), pages 482-515, 03.
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