Fresh Air Eases Work – the Effect of Air Quality on Individual Investor Activity

31 Pages Posted: 28 Nov 2017 Last revised: 5 Dec 2017

See all articles by Steffen Meyer

Steffen Meyer

University of Southern Denmark - Department of Business and Economics; Danish Finance Institute

Michaela Pagel

Columbia University - Columbia Business School

Date Written: November 2017

Abstract

This paper shows that air quality has a significantly negative effect on the likelihood of individual investors to sit down, log in, and trade in their brokerage accounts controlling for investor-, weather-, traffic-, and market-specific factors. In perspective, a one standard deviation increase in fine particulate matter leads to the same reduction in the probability of logging in and trading as a one standard deviation increase in sunshine. We document this effect for low levels of pollution that are commonly found throughout the developed world. As individual investor trading can be a proxy for everyday cognitively-demanding tasks such as office work, our findings suggest that the negative effects of pollution on white-collar work productivity are much more severe than previously thought. To our knowledge, this is the first study to demonstrate a negative impact of pollution on a measure of white-collar productivity at the individual level in a western country.

Suggested Citation

Meyer, Steffen and Pagel, Michaela, Fresh Air Eases Work – the Effect of Air Quality on Individual Investor Activity (November 2017). NBER Working Paper No. w24048, Available at SSRN: https://ssrn.com/abstract=3077776

Steffen Meyer (Contact Author)

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

Danish Finance Institute ( email )

Michaela Pagel

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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