Does air pollution cause more car accidents? Evidence from auto insurance claims

Yongheng Deng, Jia He, Bingqing Li and Xixi Shen

China Economic Review, 2024, vol. 88, issue C

Abstract: Using a proprietary data set of auto insurance claims from May 2014 to December 2016, this paper examines the influence of air pollution on the number and severity of traffic accidents in China. Combining an instrumental variable strategy with high-dimensional fixed effects, we find that air pollution significantly increases the occurrence of traffic accidents, with each 1 μg/m3 increase in the particulate matter 2.5 (PM2.5) resulting in a 0.12 % increase in traffic accident probability and a 0.40 % increase in traffic accident number within one day. A different pattern is revealed in our analysis of accident severity, evidenced by a decrease of 1.20 % in the average claim ratio compared to its mean value and a reduction of 26 yuan in the average claim amount made with an increase of 1 μg/m3 in PM2.5. Combining the effect on the number and severity of traffic accidents, for each 1 μg/m3 increase in daily PM2.5, the district daily claim amount decreases by approximately 34 yuan. Further analysis indicates that this may be related to cautious driving behavior resulting from the driver's increased risk aversion. By exercising caution and care on the road, drivers can reduce the negative influence of air pollution on road safety and avoid non-subjective behavioral biases.

Keywords: Air pollution; Car accidents; Accident severity; Risk preference (search for similar items in EconPapers)
JEL-codes: D91 Q51 Q53 R41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:88:y:2024:i:c:s1043951x24001500

DOI: 10.1016/j.chieco.2024.102261

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