TY  - RPRT
        AU  - Deschenes, Olivier
AU  - Greenstone, Michael
AU  - Shapiro, Joseph S.
        TI  - Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions
        PY  - 2013/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 7557
        UR  - https://www.iza.org/publications/dp7557
        AB  - 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.
        KW  - willingness to pay for air quality
KW  - cap and trade
KW  - ozone
KW  - pharmaceuticals
KW  - mortality
KW  - compensatory behavior
KW  - human health
        ER  -