%0 Report
        %A Deschenes, Olivier
%A Greenstone, Michael
%A Shapiro, Joseph S.
        %T Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions
        %D 2013
        %8 2013 Aug
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 7557
        %U https://www.iza.org/publications/dp7557
        %X Demand for air quality depends on health impacts and defensive investments that improve health, but little research assesses the empirical importance of defenses. We study an important cap-and-trade market, which dramatically reduced NOx emissions, a key ingredient in ozone formation. A rich quasi-experiment reveals that it decreased summertime ozone, pharmaceutical expenditures, and mortality rates. Reductions in pharmaceutical purchases and mortality are each valued at $900 million annually, suggesting that defensive investments are a substantial portion of willingness-to-pay. We cautiously conclude that ozone reductions are the primary channel for these effects, implying that ozone's costs are larger than previously understood.
        %K willingness to pay for air quality
%K cap and trade
%K ozone
%K pharmaceuticals
%K mortality
%K compensatory behavior
%K human health