Valuing Air Quality Using Happiness Data: The Case of China

29 Pages Posted: 7 Jul 2016

See all articles by Xin Zhang

Xin Zhang

Beijing Normal University (BNU) - School of Statistics

Xiaobo Zhang

International Food Policy Research Institute (IFPRI)

Xi Chen

Department of Health Policy and Management; Yale University - Department of Economics; Yale University - Yale Institution for Social and Policy Studies; IZA

Abstract

This paper estimates the monetary value of cutting PM2.5, a dominant source of air pollution in China. By matching hedonic happiness in a nationally representative survey with daily air quality data according to exact dates and locations of interviews in China, we are able to estimate the relationship between local concentration of particulate matter and individual happiness. By holding happiness constant, we calculate the tradeoff between the reduction in particulate matter and income, essentially a happiness-based measure of willingness-to-pay for mitigating air pollution. We find that people on average are willing to pay ¥539 ($88, or 3.8% of annual household per capita income) for a 1 μg/m3 reduction in PM2.5 per year per person.

Keywords: willingness to pay, hedonic happiness, air pollution, China

JEL Classification: Q51, Q53, I31

Suggested Citation

Zhang, Xin and Zhang, Xiaobo and Chen, Xi, Valuing Air Quality Using Happiness Data: The Case of China. IZA Discussion Paper No. 10028. Available at SSRN: https://ssrn.com/abstract=2803860

Xin Zhang (Contact Author)

Beijing Normal University (BNU) - School of Statistics ( email )

Beijing, 100875
China

Xiaobo Zhang

International Food Policy Research Institute (IFPRI) ( email )

2033 K Street, NW
Washington, DC 20006
United States
202-862-5677 (Phone)
202-467-4439 (Fax)

Xi Chen

Department of Health Policy and Management ( email )

60 College St
New Haven, CT 06520
United States

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Yale University - Yale Institution for Social and Policy Studies ( email )

77 Prospect Street
New Haven, CT 06520
United States

HOME PAGE: http://isps.yale.edu/team/xi-chen

IZA ( email )

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