EconPapers    
Economics at your fingertips  
 

The Elasticity of Air Quality: Evidence from Millions of Households Across the United States

Christos Makridis ()
Additional contact information
Christos Makridis: Stanford University

No 15-020, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: This paper estimates the elasticities of substitution between air quality and non-durables consumption, housing services, and leisure in the United States. First, I develop the most comprehensive database to date containing measures of household-level consumption, leisure, and demographics, together with county-level measures of weather, air quality, pollution, and economic development throughout the entire United States between 2005-2010. Second, I formulate and estimate a structural model allowing for nonseparable interactions between air quality and non-durables consumption, housing services, and leisure equal to 1.5, .62, and .32, respectively, and are identified from county-industry-specific deviations in air quality from the county averages after conditioning on shocks common to all counties within a state. Prior literature ignored the ways in which households are able to best respond to changes in environmental amenities through cross-substitution. The multi-dimensionality of the micro-data allows me to characterize heterogeneity in tastes for air quality based on brackets of educational attainment, income, age, and exposure to pollution. Third, applying my elasticity estimates to an analog of the EPA’s evaluation of the Clean Air Act Amendments of 1990, I find that the benefits are many orders of magnitude lower because households are able to substitute across different private goods and services.

Date: 2015-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www-siepr.stanford.edu/repec/sip/15-020.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www-siepr.stanford.edu:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:15-020

Access Statistics for this paper

More papers in Discussion Papers from Stanford Institute for Economic Policy Research Contact information at EDIRC.
Bibliographic data for series maintained by Anne Shor ( this e-mail address is bad, please contact ).

 
Page updated 2021-10-11
Handle: RePEc:sip:dpaper:15-020