Working Paper: NBER ID: w27502
Authors: Michael Greenstone; Guojun He; Ruixue Jia; Tong Liu
Abstract: We examine the introduction of automatic air pollution monitoring, which is a central feature of China’s “war on pollution.” Exploiting 654 regression discontinuity designs based on city-level variation in the day that monitoring was automated, we find that reported PM₁₀ concentrations increased by 35% immediately post–automation and were sustained. City-level variation in underreporting is negatively correlated with income per capita and positively correlated with true pre-automation PM₁₀ concentrations. Further, automation’s introduction increased online searches for face masks and air filters, suggesting that the biased and imperfect pre-automation information imposed welfare costs by leading to suboptimal purchases of protective goods.
Keywords: Air Pollution; Monitoring; Principal-Agent Problem; China
JEL Codes: Q53; Q55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in reported PM10 concentrations (Q53) | Increased online searches for face masks and air filters (R23) |
| Introduction of automatic monitoring (C45) | Increase in reported PM10 concentrations (Q53) |
| Introduction of automatic monitoring (C45) | Decrease in local government manipulation of pollution data (H70) |