Working Paper: NBER ID: w24686
Authors: Shuai Chen; Paulina Oliva; Peng Zhang
Abstract: A large body of literature estimates the effect of air pollution on health. However, most of these studies have focused on physical health, while the effect on mental health is limited. Using the China Family Panel Studies (CFPS) covering 12,615 urban residents during 2014 – 2015, we find significantly positive effect of air pollution – instrumented by thermal inversions – on mental illness. Specifically, a one-standard-deviation (18.04 μg/m3) increase in average PM2.5 concentrations in the past month increases the probability of having a score that is associated with severe mental illness by 6.67 percentage points, or 0.33 standard deviations. Based on average health expenditures associated with mental illness and rates of treatment among those with symptoms, we calculate that these effects induce a total annual cost of USD 22.88 billion in health expenditures only. This cost is on a similar scale to pollution costs stemming from mortality, labor productivity, and dementia.
Keywords: Air Pollution; Mental Health; China; PM2.5; Instrumental Variables
JEL Codes: I15; I18; O53; Q51; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Omitted variable bias (C20) | OLS estimates (L00) |
| Reverse causality (C22) | OLS estimates (L00) |
| Measurement error (C20) | OLS estimates (L00) |
| Thermal inversions (Q54) | Air pollution (Q53) |
| Air pollution (Q53) | Mental health (I19) |
| Air pollution (Q53) | Probability of severe mental illness (C46) |
| PM2.5 concentrations (Y10) | Mental health (I19) |
| PM2.5 concentrations (Y10) | Probability of severe mental illness (C46) |