The morbidity costs of air pollution through the Lens of Health Spending in China

Xin Zhang, Xun Zhang, Yuehua Liu, Xintong Zhao and Xi Chen
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Xin Zhang: Beijing Normal University
Xun Zhang: Beijing Normal University
Yuehua Liu: Tsinghua University
Xintong Zhao: Renmin University of China

Journal of Population Economics, 2023, vol. 36, issue 3, No 5, 1269-1292

Abstract: Abstract This study is one of the first to present causal evidence of the morbidity costs of fine particulates (PM2.5) for all age cohorts in a developing country, using individual-level health spending data from a basic medical insurance program in Wuhan, China. Our instrumental variable (IV) approach uses thermal inversion to address potential endogeneity in PM2.5 concentrations and shows that PM2.5 imposes a significant impact on healthcare expenditures. The two-stage least squares (2SLS) estimates suggest that a 10 μg/m3 (micrograms per cubic meter) reduction in monthly average PM2.5 leads to a 2.36% decrease in the value of health spending and a 0.79% decline in the number of transactions at pharmacies and healthcare facilities. Also, this effect, largely driven by spending at pharmacies, is more salient for males and children, as well as middle-aged and older adults. Moreover, our estimates may provide a lower bound on individuals’ willingness to pay, amounting to CNY 43.87 (or USD 7.09) per capita per year for a 10 μg/m3 reduction in PM2.5.

Keywords: Air quality; Health spending; Willingness to pay; China (search for similar items in EconPapers)
JEL-codes: I11 I31 Q51 Q53 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The Morbidity Costs of Air Pollution through the Lens of Health Spending in China (2023)
Working Paper: The Morbidity Costs of Air Pollution through the Lens of Health Spending in China (2022)
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DOI: 10.1007/s00148-023-00948-y

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