The Benefits Of Clean Air

By Daniel K. Benjamin

For more than thirty years, the Environmental Protection Agency has been regulating air pollution in the United States. As I reported in my March 2003 column, the costs of this regulation have been well in excess of $30 billion per year. But until now it has proven difficult to systematically pin down the resulting benefits. Recent research by Kenneth Chay and Michael Greenstone (2003) has begun the process of accurately quantifying these benefits. In an extraordinarily careful and comprehensive study of total suspended particulates (TSPs), the tiny particles emitted by internal combustion engines, for example, they have found evidence that reductions in air pollution are associated with important reductions in infant mortality rates. Indeed, their estimates imply that a ten percent reduction in TSPs from observed levels would lead to roughly 100 fewer infant deaths per year in the United States.

It is well established that very high elevations of TSPs have adverse human health effects. Finding such a link at the lower concentrations regulated by the EPA has proven elusive, however. To date, there has been no consensus on whether (1) there are no adverse effects of TSPs at low concentrations, or whether (2) the evidence of adverse effects has been masked by some of the confounding factors that go into determining health outcomes (such as income, age, and lifestyle).

The great advance made by the Chay and Greenstone study is that it focuses on the dramatic and very uneven declines in TSPs that occurred in 1980-82. The economic recession of those years caused reductions in manufacturing and transportation activities. This induced changes in TSP concentrations independent of most other potentially relevant factors. Moreover, because the recession was felt very unevenly across the nation, TSP concentrations changed unevenly across the nation as well.

On both counts, the 1980-82 period provides Chay and Greenstone with something very much like a controlled experiment; hence their ability to isolate the health effects of TSPs. This precision is reinforced by their focus on the impact of TSPs on infant mortality: Because people tend not to move to other parts of the country immediately before and after the birth of a child, the exposures occurring around the time of birth are likely to be representative of the total exposures relevant for a given infant.

With these data, the authors find that, even after controlling for other factors likely to affect infant mortality-such as prenatal care, age, marital status and education of mother, and race and gender of the infant-changes in TSP concentrations have effects on infant mortality rates that are both statistically and medically important. Thus, the authors estimate that a 10 percent reduction in TSPs could be expected to yield about a 3.5 percent reduction in the infant mortality rate. At current infant mortality rates (about 7 per thousand) and birth rates (about 4 million per year), this translates into roughly 100 fewer infant deaths per year in the United States.

Quite apart from the human tragedies that would be avoided, there would be clearly quantifiable economic benefits from such a change. The most conservative estimates of the value of a human life put the number at $1.6 million, while most studies estimate it to be $5-8 million or so. Hence, this hypothetical 10 percent reduction in TSP concentrations could be expected to yield annual benefits of at least $160 million, and perhaps as much as $500-800 million per year. While these figures are small compared to the total costs of air pollution control, they may also be only a small part of the potential benefits of reducing pollution: Other age groups may benefit from cuts in TSPs, and air pollution regulations target a variety of other pollutants.

As the authors themselves admit, a significant limitation of their study is the inability to pinpoint a specific mechanism by which reductions in TSPs lead to lower infant mortality rates. One potential linkage is through birth weights, because low birth weights are known to be associated with higher infant mortality rates. The authors do find that cutting exposures to TSPs helps reduce the incidence of low birth weights. Even in the present study, however, this effect cannot account for the observed fall in infant mortality. Another mechanism, touched on only tangentially by the authors, but one that is a current subject of medical research, is that exposure to TSPs may cause inflammation in the pregnant mother, and the resulting stress may adversely affect the fetus and its viability.(1)

Limitations notwithstanding, the present study is important on two grounds. First, it demonstrates clear evidence of some important benefits of reduced air pollution. Second, and perhaps more importantly, it establishes a methodology that can be used in future studies to broaden our understanding of the value of environmental quality. After all, if we don't know what we are getting for our money, how will we know what to buy?

NOTE
1. Personal correspondence with Daniel K. Benjamin, Jr., M.D., M.P.H., Ph.D., Assistant Professor of Pediatrics, Duke University.

REFERENCE
Chay, Kenneth Y., and Michael Greenstone. 2003. The Impact of Air Pollution on Infant Mortality: Evidence from the Geographic Variation in Pollution Shocks Induced by a Recession. Quarterly Journal of Economics 118(3): 1121-67.


Daniel K. Benjamin is a PERC senior associate and professor of economics at Clemson University. His regular column, "Tangents-Where Research and Policy Meet," investigates policy implications of recent academic research. He can be reached at: wahoo@clemson.edu

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The effect of government policy changes on the private sector has been the unifying theme that ties together Daniel K. Benjamin's broad-scale research. He not only examines the outcomes of policy changes, but also the reasons behind the modifications.Taxes, unemployment, risk assessment, and drugs have been the focus of much of Benjamin's...
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