From Fog to Smog: the Value of Pollution Information∗ Panle Jia Barwick Shanjun Li Liguo Lin Eric Zou January 2020 Abstract During 2013-2014, China launched a nationwide, real-time air quality monitoring and disclosure program, a watershed moment in the history of its environmental regula- tions. We present the first empirical analysis of this natural experiment by exploiting its staggered implementation across cities. The program has transformed the landscape of China’s environmental protection, substantially expanded public access to pollution information, and dramatically increased households’ awareness about pollution issues. These transformations, in turn, triggered a cascade of household behavioral changes, including increases in online searches for pollution-related topics, adjustments in day- to-day consumption patterns to avoid pollution exposure, and higher willingness to pay for housing in less polluted areas. As a result of both short- and long-term behavioral changes, the program reduced the mortality cost of air pollution by nearly 7%. Con- servative estimates suggest annual benefits of RMB 130 billion from the program, a figure at least one order of magnitude larger than the costs of the program and as- sociated avoidance behaviors combined. Our findings highlight considerable benefits from improving access to pollution information in developing countries, many of which are experiencing the world’s worst air pollution but do not systematically collect or disseminate pollution information. JEL Classification: D80, I10, Q53, Q58 Keywords: Smog, Information disclosure, Avoidance, Value of Information ∗Barwick: Department of Economics, Cornell University and NBER (email:
[email protected]); Li: Dyson School of Applied Economics and Management, Cornell University, NBER and RFF (email:
[email protected]); Lin: School of Economics, Shanghai University of Finance and Economics (email:
[email protected]); Zou: Department of Economics, University of Oregon (email: eric-
[email protected]).