Working Paper: NBER ID: w24048
Authors: Steffen Meyer; Michaela Pagel
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.
Keywords: Air Quality; Investor Behavior; Productivity; Cognition; Pollution
JEL Codes: D14; G11; J22; J24; Q51; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Air Quality (pollution) (Q53) | Cognitive Tasks (Trading) (G41) |
| Air Quality (measured by PM10) (Q53) | Investor Login Probability (G11) |
| Air Quality (measured by PM10) (Q53) | Trading Likelihood Conditional on Login (C29) |