Cost of economic growth: Air pollution and health expenditure

This study examines the causal effect of air pollution on health expenditure using a sample of the China Health and Nutrition Survey in 2015. It concludes that exposure to air pollution is associated with the increase in health expenditure with an elasticity of 10.013. The coefficient is roughly seven times bigger than the cost of traditional respiratory diseases. The large coefficientwill be the social cost ofmedical insurance and various diseases. Results also indicate that sample mobility can underestimate health cost. Meanwhile, we identify heterogeneity among different populations and pollutants. The estimates show that PM2.5 is themain cause of health expenditure and that males, high-income individuals, highly educated individuals, peoplewith health insurance, and older people are more sensitive to air pollution. Moreover, our evidence suggests that air pollution nonlinearly affects health expenditure. We also find that the mechanism is through diseases occurrence and diseases severity to increase health expenditure. (C) 2020 Elsevier B.V. All rights reserved.

Automated summary

This study examined the causal effect of air pollution on health expenditure using data from the China Health and Nutrition Survey in 2015. The results show that exposure to air pollution is associated with increased health expenditure, with PM2.5 being a main cause. Different populations have varying sensitivity levels to air pollution, and the mechanism through which air pollution affects health expenditure is through diseases occurrence and severity.