Here’s the latest video from MRU where I cover some interesting papers on the effect of pollution on health, cognition and productivity. The video is pre-Covid but one could also note that pollution makes Covid more dangerous. For principles of economics classes the video is a good introduction to externalities and also to causal inference, most notably the difference in difference method.
Might I also remind any instructor that Modern Principles of Economics has more high-quality resources to teach online than any other textbook.
The long-held belief that pollution is the cost a country has to pay for development is no longer true as bad air quality has a measurable detrimental impact on human productivity that could in turn reduce GDP, Canadian-American economist Alex Tabarrok said.
…“There is this old story that pollution is bad, but it increases GDP… When the United States and Japan were developing, they were polluted. So India and China also have to go through that stage of pollution — so that they get rich, and then they can afford to reduce pollution,” Tabarrok said.
“I want to say that that story is wrong. What I want to argue is that a lot of the new research indicates that we may be in a situation where we could be both healthier and wealthier at the same time by reducing pollution,” he said.
…At the seminar, Tabarrok pointed out that expecting people to make sacrifices for the sake of future generations is not a politically fruitful way to deal with pollution.
Citing the issue of crop burning in India, he said farmers are not going to be inclined to change their behaviour if they are told to stop stubble burning for the sake of Delhi residents.
“However, if these farmers are made aware of how the crop burning harms them and their families and affects their soil quality, they are more likely to participate in mitigation measures,” he said.
I was pretty tough on government policy as Business Today India reported:
More than half of India’s population lives in highly polluted areas. Research by Greenstone et al (2015) proves that 660 million people live in areas that exceed the Indian Ambient Air Quality Standard (NAAQS) for fine particulate pollution. In this context, having measures such as banning e-cigarettes and having odd-even days for vehicles to solve the problem of air pollution seems ridiculous, says Alex Tabarrok, Professor of Economics at the George Mason University and Research Fellow with the Mercatus Centre. “These are not appropriate solutions to the scale and the dimensions of the problem,” he says.
In recent years, new research has significantly increased my belief that air pollution has substantial negative effects on productivity, IQ and health (see previous posts). Research in the field is exploding which means that there must also be more false positives. Consider two recent papers. The first, The Real Effect of Smoking Bans: Evidence from Corporate Innovation by Gao et al. finds that smoking prohibition increased patenting!
We identify a positive causal effect of healthy working environments on corporate innovation, using the staggered passage of U.S. state-level laws that ban smoking in workplaces. We find a significant increase in patents and patent citations for firms headquartered in states that have adopted such laws relative to firms headquartered in states without such laws. The increase is more pronounced for firms in states with stronger enforcement of such laws and in states with weaker preexisting tobacco controls. We present suggestive evidence that smoke-free laws affect innovation by improving inventor health and productivity and by attracting more productive inventors.
But the second, Do Firms Get High? The Impact of Marijuana Legalization on Firm Performance, Corporate Innovation, and Entrepreneurial Activity by Wang et al. finds that marijuana legalization increased patenting!
We find that state-level marijuana legalization has a positive financial impact on firms, likely by affecting firms’ human capital. Firms headquartered in marijuana-legalizing states receive higher market valuations, earn higher abnormal stock returns, improve employee productivity, and increase innovation. Exploiting firm level inventor data, we directly test the human capital channel and find that post legalization, firms retain inventors that become more productive and recruit more innovative talents from out of state. We also find that marijuana-legalizing states experience an increase in the number of new startups and venture capital investments.
Would anyone have been surprised if these two papers had shown exactly the opposite results? Indeed, there is some evidence that nicotine is solid cognitive enhancer and Tyler recently argued, on the basis of good evidence, that pot makes people dumb. Is it a coincidence that anti-cigarette and pro-pot papers appear as the country moves in this direction? Social desirability bias also applies to research. So no knock on either paper but I am unconvinced. As I like to say, trust literatures not papers.
Hat tip: The excellent Kevin Lewis.
The Lancet Commission on Pollution and Health, an authoritative review with well-over a dozen distinguished co-authors, is unusually forthright on the effect of pollution, most especially lead, on IQ. I think some of their numbers, especially in paragraph three, are too large but the direction is certainly correct.
Neurotoxic pollutants can reduce productivity by impairing children’s cognitive development. It is well documented that exposures to lead and other metals (eg, mercury and arsenic) reduce cognitive function, as measured by loss of IQ.168
Loss of cognitive function directly affects success at school and labour force participation and indirectly affects lifetime earnings. In the USA, millions of children were exposed to excessive concentrations of lead as the result of the widespread use of leaded gasoline from the 1920s until about 1980. At peak use in the 1970s, annual consumption of tetraethyl lead in gasoline was nearly 100 000 tonnes.
It has been estimated that the resulting epidemic of subclinical lead poisoning could have reduced the number of children with truly superior intelligence (IQ scores higher than 130 points) by more than 50% and, concurrently, caused a more than 50% increase in the number of children with IQ scores less than 70 (figure 14).265 Children with reduced cognitive function due to lead did poorly in school, required special education and other remedial programmes, and could not contribute fully to society when they became adults.
Grosse and colleagues 46 found that each IQ point lost to neurotoxic pollution results in a decrease in mean lifetime earnings of 1·76%. Salkever and colleagues 266 who extended this analysis to include the effects of IQ on schooling, found that a decrease in IQ of one percentage point lowers mean lifetime earnings by 2·38%. Studies from the 2000s using data from the USA 267,268 support earlier findings but suggest a detrimental effect on earnings of 1·1% per IQ point.269 The link between lead exposure and reduced IQ 46, 168 suggests that, in the USA, a 1 μg/dL increase in blood lead concentration decreases mean lifetime earnings by about 0·5%. A 2015 study in Chile 270 that followed up children who were exposed to lead at contaminated sites suggests much greater effects. A 2016 analysis by Muennig 271 argues that the economic losses that result from early-life exposure to lead include not only the costs resulting from cognitive impairment but also costs that result from the subsequent increased use of the social welfare services by these lead-exposed children, and their increased likelihood of incarceration.
The number and quality of studies showing that air pollution has very substantial effects on health continues to increase. Patrick Collison reviews some of the most recent studies on air pollution and cognition. I’m going to post the whole thing so everything that follows is Patrick’s.
Air pollution is a very big deal. Its adverse effects on numerous health outcomes and general mortality are widely documented. However, our understanding of its cognitive costs is more recent and those costs are almost certainly still significantly under-emphasized. For example, cognitive effects are not mentioned in most EPA materials.
World Bank data indicate that 3.7 billion people, about half the world’s population, are exposed to more than 50 µg/m³ of PM2.5 on an annual basis, 5x the unit of measure for most of the findings below.
- Substantial declines in short-term cognitive performance after short-term exposure to moderate (median 27.0 µg/m³) PM2.5 pollution: “The results from the MMSE test showed a statistically robust decline in cognitive function after exposure to both the candle burning and outdoor commuting compared to ambient indoor conditions. The similarity in the results between the two experiments suggests that PM exposure is the cause of the short-term cognitive decline observed in both.” […] “The mean average [test scores] for pre and post exposure to the candle burning were 48 ± 16 and 40 ± 17, respectively.” – Shehab & Pope 2019.
- Chess players make more mistakes on polluted days: “We find that an increase of 10 µg/m³ raises the probability of making an error by 1.5 percentage points, and increases the magnitude of the errors by 9.4%. The impact of pollution is exacerbated by time pressure. When players approach the time control of games, an increase of 10 µg/m³, corresponding to about one standard deviation, increases the probability of making a meaningful error by 3.2 percentage points, and errors being 17.3% larger.” – Künn et al 2019.
- A 3.26x (albeit with very wide CI) increase in Alzheimer’s incidence for each 10 µg/m³ increase in long-term PM2.5 exposure? “Short- and long-term PM2.5 exposure was associated with increased risks of stroke (short-term odds ratio 1.01 [per µg/m³ increase in PM2.5 concentrations], 95% CI 1.01-1.02; long-term 1.14, 95% CI 1.08-1.21) and mortality (short-term 1.02, 95% CI 1.01-1.04; long-term 1.15, 95% CI 1.07-1.24) of stroke. Long-term PM2.5 exposure was associated with increased risks of dementia (1.16, 95% CI 1.07-1.26), Alzheimer’s disease (3.26, 95% 0.84-12.74), ASD (1.68, 95% CI 1.20-2.34), and Parkinson’s disease (1.34, 95% CI 1.04-1.73).” – Fu et al 2019. Similar effects are seen in Bishop et al 2018: “We find that a 1 µg/m³ increase in decadal PM2.5 increases the probability of a dementia diagnosis by 1.68 percentage points.”
- A study of 20,000 elderly women concluded that “the effect of a 10 µg/m³ increment in long-term [PM2.5 and PM10] exposure is cognitively equivalent to aging by approximately 2 years”. – Weuve et al 2013.
- “Utilizing variations in transitory and cumulative air pollution exposures for the same individuals over time in China, we provide evidence that polluted air may impede cognitive ability as people become older, especially for less educated men. Cutting annual mean concentration of particulate matter smaller than 10 µm (PM10) in China to the Environmental Protection Agency’s standard (50 µg/m³) would move people from the median to the 63rd percentile (verbal test scores) and the 58th percentile (math test scores), respectively.” – Zhang et al 2018.
- “Exposure to CO2 and VOCs at levels found in conventional office buildings was associated with lower cognitive scores than those associated with levels of these compounds found in a Green building.” – Allen et al 2016. The effect seems to kick in at around 1,000 ppm of CO2.
Alex again. Here’s one more. Heissel et al. (2019):
“We compare within-student achievement for students transitioning between schools near highways, where one school has had greater levels of pollution because it is downwind of a highway. Students who move from an elementary/middle school that feeds into a “downwind” middle/high school in the same zip code experience decreases in test scores, more behavioral incidents, and more absences, relative to when they transition to an upwind school”
Relatively poor countries with extensive air pollution–such as India–are not simply choosing to trade higher GDP for worse health; air pollution is so bad that countries with even moderate air pollution are getting lower GDP and worse heath.
Addendum: Patrick has added a few more.
Dean Spears, one of the authors of Where India Goes has a new book on air pollution in India, Air. When I reviewed Where India Goes in 2017 I said it was the best social science book I had read in years. Spears is able to accurately explain academic work–much of it his own and with co-authors–in accessible language and to combine that with on-the-ground reporting to produce a book that is both informative and full of human interest. He brings the same skills to Air.
As Spears shows, pollution is killing Indians, especially babies, and those it doesn’t kill it harms as seen in statistics on stunting and respiratory disease. Spears isn’t naive, however, he knows that manufacturing is also bringing tremendous benefits. The issue, however, is that a lot of pollution in India comes from relatively low value activities like burning crops. Moreover, solar power in India is cost competitive with coal today, even before taking into account health benefits. Thus, the harms of pollution are tragic because they are unnecessary.
If the costs of pollution exceed the benefits why isn’t something being done? One of the things I like about Air is that it is clear that pollution in India is both a market failure and a government failure. The government has been slow to respond to pollution because much of the public remains unaware of pollution’s true cost and much of the true cost is born by children and future people who have no vote. In the meantime, the government enhances rational ignorance by refusing to fund even the most basic equipment to measure where and when pollution ebbs and flows. Instead the government engages in virtue-politics by banning plastic bags and creating odd-even restrictions on driving in Delhi. These activities are pointless, even counter-productive, but they are well publicized and the appearance of doing something matters more than reality.
Here’s one brilliant bit:
Just next to the Raebareli coal plant is a solar power plant. The solar plant is, in principle, capable of generating 10 MW. That capacity is 1 per cent of the 1000 MW capacity of the immediately neighbouring coal plant (which had another few hundred megawatts under construction when I talked with Gaurav).
I visited the solar plant on Independence Day. The ground around the solar panels was ﬂooded with August rain. A shoe destroying walk through the mud and water brought me to the control room in a small building. There, a cheerful young engineer from Bengaluru watched a bank of computer screens. A TV monitor reviewed a list of fifteen highlights of the Prime Minister’s holiday speech that morning. The control room was set up in a museum-like display. The apparent goal was to impress visitors with modern renewable energy and with colourful displays of General Electric–branded software. The young engineer was excited to show me the screens. He clearly wanted the message to be good.
It was not good. That cloudy day, most of the dots were red, not green. The screens reported that the solar plant was generating 60 kW. The engineer assured me that one day it had gotten up to 7500 kW. A megawatt is 1000 kilowatts. So, at 0.06 MW, the solar plant was producing less than 1 per cent of the 10 MW that the signboard at the entrance promised, which would have been 1 per cent of the coal plant.
It is not surprising that a solar plant does not generate much electricity if it is built beneath the smoke of a coal plant with 100 times the capacity. Ordinarily, one places solar plants in the path of direct sunlight. This one was placed in the path of visitors.
Addendum: Case in point. India today bans e-cigarettes because of health risks!
In recent years I have substantially increased my estimate of the deadly nature of air pollution. It’s not that I had a contrary opinion earlier but the number and range of studies showing surprisingly large effects has raised this issue in relative importance in my mind. I would not have guessed, for example, that the introduction of EZ Pass could reduce pollution near toll booths enough to reduce the number of premature and low birth weight babies. I also find the following result hard to believe yet also hard to dismiss given the the accumulating body of evidence. Diane Alexander and Hannes Schwandt find that Volkswagen’s cheating diesel cars increased the number of low birth weight babies and asthma rates. Here are some details:
In 2008, a new generation of supposedly clean diesel passenger cars was introduced to the U.S. market.These new diesel cars were marketed to environmentally conscious consumers, with advertising emphasizing the power and mileage typical for diesel engines in combination with unprecedented low emissions levels. Clean diesel cars won the Green Car of the Year Award in 2009 and 2010 and quickly gained market share. By 2015, over 600,000 cars with clean diesel technology were sold in the United States. In the fall of 2015, however, it was discovered that these cars covertly activated equipment during emissions tests that reduced emissions below official thresholds, and then reversed course after testing. In street use, a single “clean diesel” car could pollute as much nitrogen oxide as 150 equivalent gasoline cars.Hereafter, we refer to cars with “clean diesel” technology as cheating diesel cars.
We exploit the dispersion of these cheating diesel cars across the United States as a natural experiment to measure the effect of car pollution on infant and child health. This natural experiment provides several unique features. First, it is typically difficult to infer causal effects from observed correlations of health and car pollution, as wealthier individuals tend to sort into less-polluted areas and drive newer, less-polluting cars. The fast roll-out of cheating diesel cars provides us with plausibly exogenous variation in car pollution exposure across the entire socio-economic spectrum of the United States. Second, it is well established that people avoid known pollution, which can mute estimated impacts of air pollution on health (Neidell, 2009). Moderate pollution increases stemming from cheating diesel cars, a source unknown to the population, are less likely to induce avoidance behaviors, allowing us to cleanly estimate the full impact of pollution. Third, air pollution comes from a multitude of sources, making it difficult to identify contributions from cars, and it is measured coarsely with pollution monitors stationed only in a minority of U.S. counties. This implies low statistical power and potential attenuation bias for correlational studies of pollution (Lleras-Muney, 2010). We use the universe of car registrations to track how cheating diesel cars spread across the country and link these data to detailed information on each birth conceived between 2007 and 2015. This setting provides rich and spatially detailed variation in car pollution.
We find that counties with increasing shares of cheating diesel cars experienced large increases both in air pollution and in the share of infants born with poor birth outcomes. We show that for each additional cheating diesel car per 1,000 cars—approximately equivalent to a 10 percent cheating-induced increase in car exhaust—there is a 2.0 percent increase in air quality indices for fine particulate matter (PM2:5) and a 1.9 percent increase in the rate of low birth weight. We find similar effects on larger particulates (PM10; 2.2 percent) and ozone (1.3 percent), as well as reductions in average birth weight (-6.2 grams) and gestation length (-0.016 weeks). Effects are observed across the entire socio-economic spectrum, and are particularly pronounced among advantaged groups, such as non-Hispanic white mothers with a college degree. Effects on pollution and health outcomes are approximately linear and not affected by baseline pollution levels. Overall, we estimate that the 607,781 cheating diesel cars sold from 2008 to 2015 led to an additional 38,611 infants born with low birth weight. Finally, we also find an 8.0 percent increase in asthma emergency department (ED) visits among young children for each additional cheating diesel car per 1,000 cars in a subsample of five states.
Another surprising result is that on a global scale air pollution reduces life expectancy more than smoking. In part, because a single individual can’t quit air pollution.
Globally, the AQLI reveals that particulate pollution reduces average life expectancy by 1.8 years, making it the greatest global threat to human health. By comparison, first-hand cigarette smoke leads to a reduction in global average life expectancy of about 1.6 years. Other risks to human health have even smaller effects: alcohol and drugs reduce life expectancy by 11 months; unsafe water and sanitation take off 7 months; and HIV/AIDS, 4 months. Conflict and terrorism take off 22 days. So, the impact of particulate pollution on life expectancy is comparable to that of smoking, twice that of alcohol and drug use, three times that of unsafe water, five times that of HIV/AIDS, and more than 25 times that of conflict and terrorism.
That is one of the news stories of the end of this week, namely that the Trump administration eliminated a previous Obama administration ruling on this, see Brad Plumer for details. That sounds horrible, doesn’t it?
I took a look at the cost-benefit study (pointed out on Twitter by Claudia Sahm, or try this link, and please note it was prepared by consultants, not by the government itself). I spent some time with these hundreds of pages, and they are not always easy to parse (my apologies to the authors for any misunderstandings). Anyway, I quickly came upon this and related passages (p.45, passim):
In summary, the Final Rule is expected to reduce employment by 124 jobs on average each year due to decreased coal mined while an additional 280 jobs will be created from increased compliance activity on average each year.
Of course those “newly created jobs” are a cost, not a benefit, and should be switched to the other side of the ledger. That is not what this study did. And if I understand p.4-31 correctly, this study is using a multiplier of about 2. This approach is completely wrong, and if it were right Appalachia would love a lot of this coal regulation for its job-creating proclivities, but of course the region doesn’t.
The claimed annual benefit from the changes, from the side of coal demand (not the only effects), is $78 million, fairly small potatoes. Note the study doesn’t consider what are commonly the most significant costs of regulation, namely distracting the attention of managers and turning companies into legal and regulatory cultures rather than entrepreneurial cultures. The study does mention uncertainty costs from regulation, although I could not find any quantification of them.
Furthermore, I am not able to scrutinize the introductory section “SUMMARY OF BENEFITS AND COSTS OF THE STREAM PROTECTION RULE” and figure out the final assessment of net benefits for the rule and where that assessment might come from. I find that worrisome, and paging through the study did not put my mind at ease in this regard.
Now, I know how this works. Many of you probably are thinking that we need to do whatever is possible to attack or shrink the coal industry, because of climate change. Maybe so! Maybe we want to stultify the coal companies, for reason of a greater global benefit. But a) there is still a role for evaluating individual policy changes by partial equilibrium methods and reporting on those results accurately, and b) “putting down the coal companies,” as you might a budgie, is not what the law says is the proper goal of policy.
Imagine holding an attitude that places the Trump administration as the actual defenders of the rule of law! Besides, don’t get too worked up (p.174):
Our analysis indicates that there will be no increase in stranded reserves under any of the Alternatives.
There is, however, a very small decline in annual coal production (pp.5-20, 5-21) from the rule that had been chosen. Water quality is improved in 262 miles of streams (7-26), in case you are wondering, that’s something but hardly a major impact and that almost entirely in underpopulated parts of the country. All the media coverage I’ve seen implies or openly states a badly exaggerated sense of total water impact, relative to this actual estimate (are you surprised?). Returning to the study, there is also no region-specific estimate of how large (or small) those water benefits might be, at least not that I could find (again, maybe I missed it, but I did find some language suggesting that no such estimate would be provided).
Chapter seven calculates the benefits of the resulting carbon emissions, but after reading that section my best estimate for those marginal benefits is zero, not the postulated $110 million. The “social cost of carbon” is actually an average magnitude, and it does not measure benefits from very small changes. Again, you might think there is an imperative to consider “this policy is conjunction with numerous other anti-coal changes,” but that is not what the law stipulates as I understand it and furthermore it hardly seems that many other anti-coal regulatory changes are on the way.
If it were up to me, I would not have overturned the coal/stream regulations, and my personal inclination is indeed to fight a war on coal. But if you look at the grounds for evaluation specified by law, and examine the cost-benefit study with even a slightly critical mindset, we don’t know what is the right answer on this individual policy decision. The study outlines nine different regulatory alternatives and it is not able to conclude which is best, nor is the quantitative thrust of the study aimed toward that end.
Mood affiliation aside, to strike this regulation down, as the Trump administration has done, is in fact not an indefensible action.
On a more practical political level, Trump wishes to send a signal to Appalachian voters that he is looking out for coal and looking out for them. This is actually a very weak action, and it was chosen because for procedural reasons it was quite easy to do. The more you complain about it, the stronger it looks, and that’s probably a more important fact than any of the particular details of this study. Whether you like it or not, the coal debate is not really one that favors the Democrats.
Addendum: Here is the CRS paper, which seems to be derivative of other work, most of all this study.
There are now pollution red alerts in at least 24 cities in north China, so are things really hopeless in the Middle Kingdom? I say no. That is the topic of my latest Bloomberg column, here are some excerpts:
One famous paper, by economists Gene M. Grossman and Alan Krueger, found that (in current dollars) the turning point for environmental improvement comes in “almost every case” when countries reach the range of $17,000 to $18,000 in per capita annual income. Current Chinese per capita income can be plausibly estimated at over $14,000 per year. That means China may not be far from starting to clean up its air, and indeed air quality is already one of the major political issues in China.
The Chinese government already responds to pollution problems with factory closings and automobile restrictions more quickly than it used to, and in general there is better data and more transparency from policymakers. The U.S. Embassy in Beijing reports pollution improvements for particulate matter over the last year. Over the last two years, there have been suggestions, admittedly debatable ones, that China’s evolution into a service-sector economy means that the turning point already has been reached.
What about the U.S. and its history of fighting air pollution?
By my estimates (see the column), the United States started cleaning up at a per capita income of at least 28k (in current dollars), in the mid-1960s, arguably later than that date. In other words, if the Chinese waited to start cleaning up their air until they were about twice as rich as is currently the case, they still would be matching the pace of America.
Paul Krugman is upset that many Millennials are toying with the idea of voting for Gary Johnson rather than Hillary Clinton. He offers a number of arguments, here is one of them:
What really struck me, however, was what the [Libertarian Party] platform says about the environment. It opposes any kind of regulation; instead, it argues that we can rely on the courts. Is a giant corporation poisoning the air you breathe or the water you drink? Just sue: “Where damages can be proven and quantified in a court of law, restitution to the injured parties must be required.” Ordinary citizens against teams of high-priced corporate lawyers — what could go wrong?
That is the opposite of the correct criticism. The main problem with classical libertarianism is that it doesn’t allow enough pollution. Under libertarian theory, pollution is a form of violent aggression that should be banned, as Murray Rothbard insisted numerous times. OK, but what about actual practice, once all those special interest groups start having their say? Historically, under the more limited government of the 19th century, it was big business that wanted to move away from unpredictable local and litigation-driven methods of control, and toward a more systematic regulatory approach at the national level. There is a significant literature on this development, starting with Morton Horwitz’s The Transformation of American Common Law.
If you think about it, this accords with standard industrial organization intuitions. Established incumbents prefer regulations that take the form of predictable, upfront high fixed costs, if only to limit entry. And to some extent they can pass those costs along to consumers and workers. The “maybe you can sue me, maybe you can’t” regime is more the favorite of thinly capitalized upstarts that have little to lose.
So under the pure libertarian regime, big business would come running to the federal government asking for systematic regulation in return for protection against the uncertain depredations of the lower-level courts. It is fine to argue the court-heavy libertarian regime would be unworkable for this reason, or perhaps it would collapse into a version of the status quo.
That would be a much more fun column: “Libertarian view untenable, implies too high a burden on polluters.” I’m not sure that would sway the Bernie Brothers however.
Some of the criticisms of libertarianism strike me as under-argued:
And if parents don’t want their children educated, or want them indoctrinated in a cult…Not our problem.
Rates of high school completion were below 70% for decades, until recently, in spite of compulsory education. Parents rescuing children from the neglect of the state seems at least as common to me as vice versa.
And what is the status quo policy on taking children away from parents who belong to “cults”? Unusual religions can be a factor in contested child custody cases (pdf), but in the absence of evidence of concrete harm, such as beatings or sexual abuse, the American government does not generally take children away from their parents, cult or not. Germany and Norway differ on this a bit, for the most part this is, for better or worse, the American way. That’s without electing Gary Johnson.
By the way, Gary Johnson slightly helps Hillary Clinton. Although probably not with New York Times readers.
Europe’s air is less corrosive than it once was, and much less foul than China’s or India’s. Industrial decline and clean-air policies since the 1950s have brought levels of many pollutants, such as sulphur dioxide, fine particulate matter (a dust that can irritate lungs), and nitrogen oxides down over the past few decades. Yet more than 400,000 Europeans still die prematurely each year because of air pollution, according to the European Environmental Agency. In 2010 the health-related costs were thought to be between €330 billion ($437 billion) and €940 billion, or 3%-7% of GDP.
Nine out of ten European city-dwellers are exposed to pollution in excess of guidelines produced by the World Health Organisation (WHO). Some of the highest levels of nitrogen dioxide are found in London; several cities in Turkey are choked with high levels of PM10 (particulate matter of at most 10-micron diameter). But some of the worst pollution is in Eastern Europe (see map). Coal-fired power stations are still common there, and some pollutants blow in from the rest of Europe. The commission is prosecuting 18 governments for infringing pollution limits.
Researchers at King’s College London have found that a child born in London in 2010 can expect to have his life cut short by nine months as a result of breathing its high levels of PM2.5—the very finest particulate matter—if pollution levels do not change.
That article excerpt is from The Economist.
I believe I linked to an earlier version of these results a while ago, but the point deserves reiteration:
For the study, Konisky and Teodoro examined records from 2000 to 2011 for power plants and hospitals regulated under the Clean Air Act and from 2010 to 2013 for water utilities regulated under the Safe Drinking Water Act. The study included over 3,000 power plants, over 1,000 hospitals and over 4,200 water utilities — some privately owned and others owned by public agencies.
For power plants and hospitals, public facilities were on average 9 percent more likely to be out of compliance with Clean Air Act regulations and 20 percent more likely to have committed high-priority violations.
For water utilities, public facilities had on average 14 percent more Safe Drinking Water Act health violations and were 29 percent more likely to commit monitoring violations.
Public power plants and hospitals that violated the Clean Air Act were 1 percent less likely than private-sector violators to receive a punitive sanction and 20 percent less likely to be fined.
Public water utilities that violated Safe Drinking Water Act standards were 3 percent less likely than investor-owned utilities to receive formal enforcement actions.
Konisky said the findings are significant but not surprising. Government entities have higher costs of complying with regulations because they often must go through political processes to raise the money needed to improve their facilities. And they may face pushback from customers or taxpayers who object to higher rates and have the political power to block them.
Public entities also face lower costs for violating the regulations, the authors argue. There is evidence from other studies that they are able to delay or avoid paying fines when penalties are assessed. And officials with regulatory agencies may be sympathetic to violations by public entities, because they understand the difficulty of securing resources in the public sector.
The full Indiana press release is here, and for the pointer I thank Charles Klingman.
Kai Xue writes:
But I say in plain honesty that terrible air pollution while taken as mandarin indifference to public demands is to the contrary a manifestation of commitment to a mass middle class by the Chinese political system.
Policy deliberately trades off public health for blue collar jobs. Around Beijing are industries including steel mills and cement plants that are major polluters. About 1 in 10 tonnes of the world’s steel output is smelted in Hebei, the province surrounding Beijing. With so much local heavy industry, cleaning the air would start with plant closures that cause concentrated unemployment.
Whether this bargain of clean air for economic growth is a good deal is a fair question but whether it is virtuous public policy depends on the extent decision-makers are subject to or instead insulated from the consequences of self-produced actions.
Beijing is the seat of power in a centralized state. About one third of the thousands who hold junior ministerial rank or higher and many of the very rich reside here.
Regardless of stature, for every Beijing inhabitant air pollution is the most serious public concern.
That is from an Atlantic article by James Fallows.
The latest release of our principles of economics class covers Externalities, Costs and Profit Maximization, Competition and the Invisible Hand, and Monopoly.
I am especially fond of our video, Trading Pollution, which explains the economics of tradeable pollution permits. Tyler and I worked with the incredibly talented team at Tilapia Film for a long time on a montage involving jigsaw puzzle pieces that’s near the middle of the video. The montage is only a few seconds long but I think it’s a beautiful way of illustrating how the price system draws upon information that is dispersed across many minds. There is a lot of deep economics behind the visual metaphors.
Addendum: For those of you using our textbook, this video and others are available directly from the textbook (using QR codes) and also available with assessment in our course management system, Launchpad.
A detailed analysis of powerplants in China by MIT researchers debunks
the widespread notion that outmoded energy technology or the utter
absence of government regulation is to blame for that country’s
notorious air-pollution problems. The real issue, the study found,
involves complicated interactions between new market forces, new
commercial pressures and new types of governmental regulation…
China’s power sector has been expanding at a rate roughly equivalent to
three to four new coal-fired, 500 megawatt plants coming on line every
week…most of the new plants have been built to very high technical
standards, using some of the most modern technologies available. The
problem has to do with the way that energy infrastructure is being
operated and the types of coals being burned.
The good news is that there is a single lever — coal quality — that could have an enormous impact on Chinese pollution levels. Here is the full story.