Misperceptions About Air Pollution: Implications for Willingness to Pay and Environmental Inequality

This paper explores whether misperceptions about air pollution contribute to environmental inequality in the United States. We use a two-part survey experiment to elicit respondents' beliefs about local air quality and pollution's effects on life expectancy. We document how misperception differs across demographic groups and then how this misperception affects willingness to pay (WTP) for cleaner air. Since misperception or beliefs may be correlated with other unobservable determinants of WTP, we randomly show selected participants customized information about their actual air pollution. This allows us to trace out how experimentally induced changes in beliefs affect WTP for air quality. Our results suggest significant misperceptions about air pollution in the US. Respondents, on average, overestimate both their air pollution exposure and its impact on life expectancy. Beliefs about relative air pollution are not systematically biased but are noisy. Despite some differences in misperceptions between Black and White respondents, counterfactual exercises do not suggest that rectifying these misperceptions would meaningfully close the observed gap in WTP and/or pollution exposure.