Evaluating the short-term cost of low-level local air pollution: a life satisfaction approach

An Erratum to this article was published on 19 May 2016

Abstract

To estimate the impact of air pollution on well-being, we combine a set of repeated cross-sectional surveys of individuals with high-resolution pollution and weather data. The respondents’ level of life satisfaction is modeled as a function of their socioeconomic characteristics and income as well as the weather and air pollution on the day of the survey interview. To overcome endogeneity problems, we include a set of high-resolution geographic fixed effects. Our analysis suggests that even after controlling for seasonal and local fixed effects, higher air pollution significantly reduces life satisfaction. The adverse effect of transient increases in air pollution is greater on individuals with poor health status. Estimating the average compensating differential between income and air pollution shows that the value of improving air quality by one-half standard deviation throughout the year is about 4.4 % of the average annual income of Canadians.

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Notes

  1. 1.

    ESM asks participants to stop at certain times and make notes of their experience and report temporal things like feelings in that moment.

  2. 2.

    For instance, encouraging diesel as a transportation fuel can represent a trade-off between reducing greenhouse gas emission and reducing local particulate pollution.

  3. 3.

    Sumner’s theory of welfare is a subjective theory in which, for a state of affairs to make a person better off, it needs to enter her experience. Additionally, for the self-report of happiness to represent welfare, it is required that a subject’s experience of (satisfying) states not be based on false beliefs and not be influenced by such things as coercion and exploitation (Sumner 1996).

  4. 4.

    On the day of the interview, the respondents’ SWB reflects their 1-day income level, which we can take to be proxied by \(\frac{1}{365}\) of their annual income, and the 1-day pollution level which we measure. Because we include geographic dummies, the linear model reflects only the variation (changes) from the mean pollution level.

  5. 5.

    For SO\(_{2},\) 1 ppb is equivalent to 2.6 μg m−3

  6. 6.

    Most of the highly polluted subdivisions are small with individuals living within 5 km of the monitoring station. In a few larger subdivisions, we consider only the individuals in an area of 25 km\(^{2}\) as the affected population (It is assumed that population is uniformly distributed over these subdivisions).

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Correspondence to Christopher Barrington-Leigh.

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An erratum to this article is available at http://dx.doi.org/10.1007/s10018-016-0159-0.

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Barrington-Leigh, C., Behzadnejad, F. Evaluating the short-term cost of low-level local air pollution: a life satisfaction approach. Environ Econ Policy Stud 19, 269–298 (2017). https://doi.org/10.1007/s10018-016-0152-7

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Keywords

  • Life satisfaction
  • Pollution
  • Environmental valuation
  • Compensating differential