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The Healthcare Cost of Air Pollution: Evidence from the World’s Largest Payment Network

Author

Listed:
  • Panle Jia Barwick
  • Shanjun Li
  • Deyu Rao
  • Nahim Bin Zahur

Abstract

Using the universe of credit- and debit-card transactions in China during 2013-2015, this paper provides the first nationwide analysis of the healthcare cost of PM2.5. We leverage spatial spillovers of PM2.5 from long-range transport for exogenous variation in local pollution and employ a flexible distributed lag model to capture semiparametrically the dynamic response of pollution exposure. Our analysis shows significant impacts of PM2.5 on healthcare spending in both the short and medium terms. A 10 mg/m3 decrease in PM2.5 would reduce annual healthcare spending by more than $9.2 billion, about 1.5% of China’s annual healthcare expenditure.

Suggested Citation

  • Panle Jia Barwick & Shanjun Li & Deyu Rao & Nahim Bin Zahur, 2018. "The Healthcare Cost of Air Pollution: Evidence from the World’s Largest Payment Network," NBER Working Papers 24688, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24688
    Note: EEE
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    More about this item

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • 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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