Lecture+09+Slides - Air Pollution and Health EEP 145...

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Air Pollution and Health EEP 145 Professor Michael Anderson U.C. Berkeley Dept. of Agricultural and Resource Economics
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Air pollution is the textbook example of an externality Introduction When we say “pollution,” air pollution is likely the Frst one that comes to mind This may be because airborne pollutants have the greatest potential for dispersal “Land” pollution (garbage, toxic waste) disperses little Thus the individual that pollutes bears a large share of the pollution cost – externality is limited Water pollution has greater potential for dispersal But it is still limited to individuals living adjacent to the water (unless drinking water becomes contaminated) Airborne pollutants affect everyone in a given area
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Air pollution is a case in which the Coase Theorem will surely fail Introduction There will be a very large number of negotiating parties Very unlikely that private negotiations will yield an optimal solution Government intervention is a virtual necessity But how large in the externality? How dangerous is air pollution? This is an empirical question.
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LA smog on 29 Jan 2004. Inversion layer is easily visible.
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Chay and Greenstone (2003) study the impact of air pollution on infant health Background Little doubt that radically elevated levels of air pollution are bad for human health (Great Smog of ’52) But those levels are rarely found in developed countries today Correlation between air pollution exposure and infant mortality is likely positive But how much of this correlation represents a causal effect and how much is due to unobserved factors such as socioeconomic status, population density, etc?
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C & G use the 1981-82 recession as a “natural experiment” that changed air pollution levels Background Idea: Use changes in air pollution levels induced by the recession to estimate effect on infant mortality 1981-82 recession caused a substantial reduction in total suspended particulates (TSP) as polluting industries shut down Reduction in TSPs varied widely across counties Counties with a high density of polluting industries saw large reductions Counties with a low density of polluting industries saw small reductions
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Estimates Compare changes in infant mortality (due to internal causes) in counties with large TSP reductions to changes in infant mortality in counties with small TSP reductions Finding: 1 percent decrease in TSPs is associated with a 0.35 percent decrease in infant mortality rates Are there other factors changing differentially across high/low TSP reduction counties that could explain this result? In general, changes in TSP are uncorrelated with changes
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Lecture+09+Slides - Air Pollution and Health EEP 145...

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