Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program
Michael Greenstone () and
Joseph S. Shapiro
American Economic Review, 2017, vol. 107, issue 10, 2958-89
The demand for air quality depends on health impacts and defensive investments, but little research assesses the empirical importance of defenses. A rich quasi-experiment suggests that the Nitrogen Oxides (NOx) Budget Program (NBP), a cap-and-trade market, decreased NOx emissions, ambient ozone concentrations, pharmaceutical expenditures, and mortality rates. The annual reductions in pharmaceutical purchases, a key defensive investment, and mortality are valued at about $800 million and $1.3 billion, respectively, suggesting that defenses are over one-third of willingness-to-pay for reductions in NOx emissions. Further, estimates indicate that the NBP's benefits easily exceed its costs and that NOx reductions have substantial benefits.
JEL-codes: I12 Q51 Q53 Q58 (search for similar items in EconPapers)
Note: DOI: 10.1257/aer.20131002
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
https://www.aeaweb.org/articles/attachments?retrie ... fy8r46ilUY3Hq03dcw-f (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... 5P0bJYwJGJ2oYs6q3tb_ (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... HMXFu7YPVKmMwei6w16H (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.
Working Paper: Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:107:y:2017:i:10:p:2958-89
Ordering information: This journal article can be ordered from
Access Statistics for this article
American Economic Review is currently edited by Esther Duflo
More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().