Fresh Air Eases Work – The Effect of Air Quality on Individual Investor Activity

Steffen Meyer and Michaela Pagel

No 24048, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper shows that air quality has a significantly negative effect on the likelihood of individual investors to sit down, log in, and trade in their brokerage accounts controlling for investor-, weather-, traffic-, and market-specific factors. In perspective, a one standard deviation increase in fine particulate matter leads to the same reduction in the probability of logging in and trading as a one standard deviation increase in sunshine. We document this effect for low levels of pollution that are commonly found throughout the developed world. As individual investor trading can be a proxy for everyday cognitively-demanding tasks such as office work, our findings suggest that the negative effects of pollution on white-collar work productivity are much more severe than previously thought. To our knowledge, this is the first study to demonstrate a negative impact of pollution on a measure of white-collar productivity at the individual level in a western country.

JEL-codes: D14 G11 J22 J24 Q51 Q53 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-ene, nep-env and nep-lma
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Citations: View citations in EconPapers (17)

Published as Steffen Meyer & Michaela Pagel, 2024. "Fresh air eases work—the effect of air quality on individual investor activity," Review of Finance, vol 28(3), pages 1105-1149.

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