Household Responses to Private Risk Information

Benjamin Krebs and Matthew Neidell

No 34875, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how private information affects household responses to environmental risk. Using data from residential air quality monitors, we exploit the timing of monitor installation and high-frequency fine particulate matter (PM2.5) readings to identify responses to new information about indoor pollution risk. We find that indoor PM2.5 concentrations decline by 2.5 ug/m3 over the 12 weeks following installation, conditional on contemporaneous outdoor pollution, with effects significantly larger among households with high initial indoor pollution. The indoor–outdoor pollution gradient declines over time, indicating that households become increasingly effective at mitigating exposure when marginal health damages are highest. Using machine learning techniques to infer cooking activity and air purifier adoption, we show that households respond primarily through durable defensive investments rather than reductions in pollution-generating behavior, with back-of-the-envelope calculations implying positive net benefits. Our results suggest that personalized risk information increases the salience of indoor pollution as a controllable risk for households, in contrast to spatially coarse public information that frames pollution primarily as an outdoor threat requiring avoidance.

JEL-codes: D81 D83 Q53 Q55 (search for similar items in EconPapers)
Date: 2026-02
Note: EEE EH PE
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