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Inequality, Information Failures, and Air Pollution

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  • Catherine Hausman
  • Samuel Stolper
Abstract
Research spanning several disciplines has repeatedly documented disproportionate pollution exposure in low-income communities and communities of color. Among the various proposed causes of this pattern, those that have received the most attention are income inequality, discrimination, and firm costs (of inputs and regulatory compliance). We argue that an additional channel – information – is likely to play an important role in generating disparities in pollution exposure. We present multiple reasons for a tendency to underestimate pollution burdens. Using a model of housing choice, we then derive conditions under which “hidden” pollution leads to an inequality – even when all households face the same lack of information. This inequality arises when households sort according to known pollution and other disamenities, which we show are positively correlated with hidden pollution. To help bridge the gap between environmental justice and economics, we discuss the relationship between hidden information and three different distributional measures: exposure to pollution; exposure to hidden pollution; and welfare loss due to hidden pollution.

Suggested Citation

  • Catherine Hausman & Samuel Stolper, 2020. "Inequality, Information Failures, and Air Pollution," NBER Working Papers 26682, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26682
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    6. Baoxi Li & De Xiao, 2021. "The Impact of Income Inequality on Subjective Environmental Pollution: Individual Evidence from China," IJERPH, MDPI, vol. 18(15), pages 1-26, July.
    7. Marcus, Michelle & Mueller, Rosie, 2024. "Unregulated contaminants in drinking water: Evidence from PFAS and housing prices," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
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    9. Vasnetsov Catherine & Vasnetsov Victor & Pramoda Meghna & Pramoda Siona, 2024. "Multifaceted contribution of environmental pollution, race and income to health inequities in Texas," Environmental & Socio-economic Studies, Sciendo, vol. 12(3), pages 11-22.
    10. Shuai Zhang & Dajian Zhu & Lilian Li, 2023. "Urbanization, Human Inequality, and Material Consumption," IJERPH, MDPI, vol. 20(5), pages 1-18, March.
    11. Camille Salesse, 2022. "Inequality in exposure to air pollution in France: bringing pollutant cocktails into the picture," CEE-M Working Papers hal-03882438, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    12. Edward W. Pinchbeck & Sefi Roth & Nikodem Szumilo & Enrico Vanino, 2023. "The Price of Indoor Air Pollution: Evidence from Risk Maps and the Housing Market," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(6), pages 1439-1473.
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    14. Ranie Lin & Lala Ma & Toan Phan, 2021. "Race and Environmental Worries," Working Paper 21-15, Federal Reserve Bank of Richmond.
    15. Lucas Cain & Danae Hernandez-Cortes & Christopher Timmins & Paige Weber, 2023. "Recent Findings and Methodologies in Economics Research in Environmental Justice," CESifo Working Paper Series 10283, CESifo.
    16. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
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    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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