Pumped Up
Stuck in the Seventies: Gas Prices and Consumer Sentiment
Carola Binder & Christos Makridis
Review of Economics and Statistics, March 2022, Pages 293–305
Abstract:
Using daily consumer survey data, we analyze the transmission of gas prices to consumer beliefs and expectations about the economy. We exploit the high frequency and geographic disaggregation of our data set to facilitate identification. Consumer sentiment becomes more pessimistic with rising gas prices. This effect is strongest for consumers who lived through the recessionary oil crises in the 1970s, consistent with models of learning from personal experience. For younger respondents, the sensitivity of sentiment to gas prices is stronger for college-educated respondents. Sensitivity is also higher in states with greater gas expenditures per capita.
The Impact of Car Pollution on Infant and Child Health: Evidence from Emissions Cheating
Diane Alexander & Hannes Schwandt
Review of Economic Studies, forthcoming
Abstract:
In 2008, Volkswagen introduced a new generation of “Clean Diesel” cars and heavily marketed them to environmentally conscious U.S. consumers. Unknown to the public, these cars were anything but clean, emitting pollutants up to 150 times the level of comparable gas-fueled cars. We study the rollout of these emissions-cheating diesel cars across the United States from 2008–2015 as a natural experiment to examine the impact of moderate levels of car pollution on infant and child health in the general population. Using the universe of vehicle registrations, we find that an additional cheating diesel car per 1,000 cars increases PM2.5, PM10, and ozone by 2, 2.2, and 1.3 percent, respectively, while the low birth weight rate and infant mortality rate increase by 1.9 and 1.7 percent, respectively. Similar impacts are found for acute asthma attacks in children. These health impacts occur at all pollution levels and across the socioeconomic spectrum.
Toxic test scores: The impact of chemical releases on standardized test performance within U.S. schools
Irene Jacqz
Journal of Environmental Economics and Management, forthcoming
Abstract:
This paper estimates the effects of exposure to toxic chemicals, and individual airborne metals in particular, in early childhood on school-level standardized test performance a decade later. The analysis links the cohort-level proficiency of primary school students born in the United States in the early 2000s to Toxics Release Inventory exposure, exploiting variation in the timing and magnitude of toxicity risk within public school catchment areas to estimate the impact of early exposure on educational outcomes. Estimates of airborne toxicity, which account for composition, may better correspond to human health risks from air pollution than total fine particulates. One standard deviation higher aggregate airborne toxicity in the catchment area during the year in which most students were born causes cohorts to perform 0.016 standard deviations worse on statewide tests. Finally, airborne chromium is identified as a driver of this effect: a ten percent change in ambient chromium concentrations during the first year of life casuses a decrease in standardized test proficiency of 0.01 standard deviations.
Half of US population exposed to adverse lead levels in early childhood
Michael McFarland, Matt Hauer & Aaron Reuben
Proceedings of the National Academy of Sciences, 7 March 2022
Abstract:
Lead is a developmental neurotoxicant in wide industrial use that was once broadly distributed in the environment. The extent of the US population exposed in early life to high levels of lead is unknown, as are the consequences for population IQ. Serial, cross-sectional blood–lead level (BLL) data from National Health and Nutrition Examination Survey (NHANES), a nationally representative sample of US children aged 1 to 5 (n = 11,616) from 1976 to 1980 to 2015 to 2016 was combined with population estimates from the US Census, the Human Mortality Database, and the United Nations. NHANES and leaded gasoline consumption data were used to estimate BLLs from 1940 to 1975. We estimated the number and proportion of people that fall within seven BLL categories (<4.99; 5 to 0.9.99; 10 to 14.9: 15 to 19.9; 20.24.9; 25 to 29.9; and ≥30 µg/dL), by year and birth cohort, and calculated IQ points lost because of lead exposure. In 2015, over 170 million people (>53%) had BLLs above 5 µg/dL in early life (±2.84 million [80% CI]), over 54 million (>17%) above 15 µg/dL, and over 4.5 million (>1%) above 30 µg/dL (±0.28 million [80% CI]). BLLs greater than 5 µg/dL were nearly universal (>90%) among those born 1951 to 1980, while BLLs were considerably lower than 5 µg/dL among those born since 2001. The average lead-linked loss in cognitive ability was 2.6 IQ points per person as of 2015. This amounted to a total loss of 824,097,690 IQ points, disproportionately endured by those born between 1951 and 1980.
Does air quality affect inventor productivity? Evidence from the NOx budget program
Yue Luo, Yangyang Chen & Ji-Chai Lin
Journal of Corporate Finance, forthcoming
Abstract:
Using the NOx budget program (NBP) as a quasi-natural experiment, we study how air quality affects the productivity of patent inventors. Motivated by previous studies linking air quality to people's risk-taking tendencies and cognitive abilities, we find that after the implementation of the NBP, inventors located in NBP participating states produce more patents and the quality of their patents increases. These inventors engage more in exploratory innovation and less in exploitative innovation, and they shift their strategies toward risky, high-value innovation. Our findings suggest that risk-taking and cognitive ability are the channels through which improved air quality enhances inventor productivity.
Economic Geography and the Efficiency of Environmental Regulation
Alex Hollingsworth et al.
NBER Working Paper, March 2022
Abstract:
We develop a spatial equilibrium model to evaluate the efficiency and distributional impacts of the leading air quality regulation in the United States: the National Ambient Air Quality Standards (NAAQS). We link our economic model to an integrated assessment model for air pollutants which allows us to capture endogenous changes in emissions, amenities, labor, and production. Our results show that the NAAQS generate over $23 billion of annual welfare gains. This is roughly 80 percent of welfare gains of the second-best NAAQS design, but only 25 percent of the first-best emission pricing policy. The NAAQS benefits are concentrated in a small set of cities, impose substantial costs on manufacturing workers, improve amenities in counties in compliance with the NAAQS, and reduce emissions in compliance counties through general equilibrium channels. These findings highlight the importance of accounting for geographic reallocation and equilibrium responses when quantifying the effects of environmental regulation.
Natural gas flaring, respiratory health, and distributional effects
Wesley Blundell & Anatolii Kokoza
Journal of Public Economics, forthcoming
Abstract:
Although there is strong evidence that oil and natural gas development lead to decreases in local ambient air quality, there is less evidence of a causal link between these activities and human health. This paper explores the environmental health costs of burning natural gas by-products during crude oil extraction – flaring. We estimate the impact of flared natural gas on respiratory health by using quasi-random variation in upwind flaring generated by the interaction of wind patterns and natural gas processing capacity. Specifically, we construct a novel dataset to estimate the causal effect of increased upwind flaring on the monthly respiratory-related hospital visitation rate by using the number of upwind wells that are connected to a capacity-constrained natural gas processing facility as an instrument for monthly upwind flaring. We find that a 1% increase in the amount of flared natural gas in North Dakota would increase the respiratory-related hospital visitation rate by 0.73%. Furthermore, zip codes that were exposed to more than half of all flared natural gas extracted less than 20% of all resource wealth during the sample time period, and the zip codes exposed to a disproportionate amount of flaring tend to be economically-disadvantaged and communities of color. Our estimates indicate that the health costs constitute a material portion of the external cost of flaring, and therefore ought to be considered in global initiatives to reduce flaring.
Environmental Liabilities, Creditors, and Corporate Pollution: Evidence from the Apex Oil Ruling
Jianqiang Chen et al.
NBER Working Paper, February 2022
Abstract:
We evaluate the impact of the 2008 Apex Oil court decision that made the creditors of some corporations financially liable for the environmental damages caused by specific pollutants. Apex reduced the circumstances under which environmental liabilities were dischargeable in Chapter 11, which generated financial incentives for the creditors of firms near bankruptcy to pressure their firms to reduce emissions of those pollutants. We discover that Apex lowered bond prices, widened loan spreads, and reduced corporate pollution among firms that (a) release the specific chemicals covered by Apex and (b) are close to Chapter 11 and hence likely to be affected by changes to the dischargeability of environmental liabilities. Further tests suggest that creditors rapidly responded to Apex and successfully induced firms to reduce pollution.
Environmental outcomes of the US Renewable Fuel Standard
Tyler Lark et al.
Proceedings of the National Academy of Sciences, 1 March 2022
Abstract:
The Renewable Fuel Standard (RFS) specifies the use of biofuels in the United States and thereby guides nearly half of all global biofuel production, yet outcomes of this keystone climate and environmental regulation remain unclear. Here we combine econometric analyses, land use observations, and biophysical models to estimate the realized effects of the RFS in aggregate and down to the scale of individual agricultural fields across the United States. We find that the RFS increased corn prices by 30% and the prices of other crops by 20%, which, in turn, expanded US corn cultivation by 2.8 Mha (8.7%) and total cropland by 2.1 Mha (2.4%) in the years following policy enactment (2008 to 2016). These changes increased annual nationwide fertilizer use by 3 to 8%, increased water quality degradants by 3 to 5%, and caused enough domestic land use change emissions such that the carbon intensity of corn ethanol produced under the RFS is no less than gasoline and likely at least 24% higher. These tradeoffs must be weighed alongside the benefits of biofuels as decision-makers consider the future of renewable energy policies and the potential for fuels like corn ethanol to meet climate mitigation goals.
Recently constructed hydropower dams were associated with reduced economic production, population, and greenness in nearby areas
Peilei Fan et al.
Proceedings of the National Academy of Sciences, 22 February 2022
Abstract:
Hydropower dams produce huge impacts on renewable energy production, water resources, and economic development, particularly in the Global South, where accelerated dam construction has made it a global hotspot. We do not fully understand the multiple impacts that dams have in the nearby areas from a global perspective, including the spatial differentiations. In this study, we examined the impacts of hydropower dam construction in nearby areas. We first found that more than one-third of global gross domestic production (GDP) and almost one-third of global population fall within 50 km of the world’s 7,155 hydropower dams (<10% of the global land area sans the Antarctic). We further analyzed impacts of 631 hydropower dams (≥1-megawatt capacity) constructed since 2001 and commissioned before 2015 for their effects on economy, population, and environment in nearby areas and examined the results in five regions (i.e., Africa, Asia, Europe, North America, and South America) and by different dam sizes. We found that recently constructed dams were associated with increased GDP in North America and urban areas in Europe but with decreased GDP, urban land, and population in the Global South and greenness in Africa in nearby areas. Globally, these dams were linked with reduced economic production, population, and greenness of areas within 50 km of the dams. While large dams were related with reduced GDP and greenness significantly, small and medium dams were coupled with lowered population and urban land substantially, and large and medium dams were connected to diminished nighttime light noticeably in nearby areas.