Health, air pollution, and location choice

This paper provides evidence that air-pollution-related health conditions change how households evaluate clean air and, as a result, incentivize them to relocate to locations with better air quality. The evidence implies that naive estimations of the adverse effect of air pollution on health are biased, as people sort on air quality differently depending on their health. I employ a spatial-equilibrium model in which households choose a county to live in based on county-level characteristics including air pollution. Using National Longitudinal Survey of Youth data, I create a panel tracking respondents’ respiratory health shocks and county-level location for over three decades. The estimates from a multinomial mixed logit model support the hypothesis that households move to cleaner-air locations after an adult is diagnosed with asthma. I find that households react more strongly to an asthma diagnosis for an adult than to a child’s diagnosis. The estimated median increase in marginal willingness to pay for a one-unit reduction in Air Quality Index after a diagnosis of adult-onset asthma is $157–$830 (in constant 1982–84 dollars).