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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
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    Citations

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    Cited by:

    1. Julia Rechlitz & Luis Sarmiento & Aleksandar Zaklan, 2020. "Make Sure the Kids are OK: Indirect Effects of Ground-Level Ozone on Well-Being," Discussion Papers of DIW Berlin 1877, DIW Berlin, German Institute for Economic Research.
    2. Luis Sarmiento, 2020. "I Am Innocent: Hourly Variations in Air Pollution and Crime Behavior," Discussion Papers of DIW Berlin 1879, DIW Berlin, German Institute for Economic Research.
    3. He, Guojun & Liu, Tong & Zhou, Maigeng, 2020. "Straw burning, PM2.5, and death: Evidence from China," Journal of Development Economics, Elsevier, vol. 145(C).
    4. Bruna Morais Guidetti & Paula Carvalho Pereda, Edson Roberto Severnini, 2021. "Health Shocks under Hospital Capacity Constraints: Evidence from Air Pollution in São Paulo, Brazil," Working Papers, Department of Economics 2021_05, University of São Paulo (FEA-USP).
    5. Chi-Yo Huang & Pei-Han Chung & Joseph Z. Shyu & Yao-Hua Ho & Chao-Hsin Wu & Ming-Che Lee & Ming-Jenn Wu, 2018. "Evaluation and Selection of Materials for Particulate Matter MEMS Sensors by Using Hybrid MCDM Methods," Sustainability, MDPI, Open Access Journal, vol. 10(10), pages 1-35, September.
    6. Li, Pei & Lu, Yi & Wang, Jin, 2020. "The effects of fuel standards on air pollution: Evidence from China," Journal of Development Economics, Elsevier, vol. 146(C).
    7. Guidetti, Bruna & Pereda, Paula & Severnini, Edson R., 2020. "Health Shocks under Hospital Capacity Constraint: Evidence from Air Pollution in Sao Paulo, Brazil," IZA Discussion Papers 13211, Institute of Labor Economics (IZA).
    8. Fu, Shihe & Viard, Brian & Zhang, Peng, 2019. "Trans-Boundary Air Pollution Spillovers: Physical Transport and Economic Costs by Distance," MPRA Paper 102438, University Library of Munich, Germany, revised 14 Aug 2020.
    9. Yi, Fujin & Ye, Haijian & Wu, Ximing & Zhang, Y. Yvette & Jiang, Fei, 2020. "Self-aggravation effect of air pollution: Evidence from residential electricity consumption in China," Energy Economics, Elsevier, vol. 86(C).
    10. Guoying Deng & Manuel A. Hernandez & Shu Xu, 2020. "When Power Plants Leave Town: Environmental Quality and the Housing Market in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(4), pages 751-780, December.
    11. Wang, Chunchao & Lin, Qianqian & Qiu, Yun, 2020. "Productivity Loss amid Invisible Pollution," GLO Discussion Paper Series 722, Global Labor Organization (GLO).
    12. Jin, Yana & Andersson, Henrik & Zhang, Shiqiu, 2020. "Do preferences to reduce health risks related to air pollution depend on illness type? Evidence from a choice experiment in Beijing, China," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).

    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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