Environment and Happiness: Valuation of Air Pollution in Ten European Countries

Heinz Welsch

No 356, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper uses a set of panel data from happiness surveys, jointly with data on per capita income and pollution, to examine how self-reported well-being varies with prosperity and environmental conditions. This approach permits to show that citizens care about prosperity and the environment, and to calculate the trade-off people are willing to make between them. The paper finds that air pollution plays a statistically significant role as a predictor of intercountry and inter-temporal differences in subjective well-being. The effect of air pollution on well-being shows up as a considerable monetary valuation of improved air quality. The air quality improvements achieved in Western Europe in 1990-1997 are valued at almost $900 per capita per year in the case of nitrogen dioxide and more than $1400 per capita per year in the case of lead.

Keywords: pollution; environmental valuation; subjective well-being; marginal rate of substitution (search for similar items in EconPapers)
JEL-codes: Q2 (search for similar items in EconPapers)
Pages: 17 p.
Date: 2003
New Economics Papers: this item is included in nep-res
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Citations: View citations in EconPapers (1)

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