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Prof. Shanjun LI: Air Pollution, Consumer Spending and Willingness to Pay for Clean Air

Publish Date: 2017/06/23 16:08:27    Hits:

On 22nd June, 2017, we welcome Prof. Shanjun LI to our series lecture on “Economicsand Business”, as well as his talk of Air Pollution,Consumer Spending and Willingness to Pay for Clean Air.Professor LI serves on the faculty of  Charles H. Dyson School of Applied Economics and Management in Cornell University, and is the Co-Director of Cornell Institute for China Economic Research. Thelecture was hosted by Prof. Ying FAN, Dean of School of Economics and Management at Beihang University.

Before the talk, Prof. LI accepted our appointment as one of the fellows on the International Academic Committee (IAC) in the Institute of Economics and Business, BUAA. Dean Ying FAN made this announcement on behalf of Academician Xu Huibin, President of Beihang University.

In the following talk, Prof. LI showed us his recent work on the evaluation of howair pollution impacts people’s expenditure, as well as their willingness to pay(WTP) on health related goods and services, which is acritical issue in the cost-benefit analysis of environmental regulations. Based on the universe of credit and debit card transactions in China, Prof. Shanjun Li quantifies health impacts of PM 2.5 pollution and estimatesconsumer WTP for improved air quality. The analysis shows that PM2.5pollution has significant impacts on health spending in both short term (withina week) and longer term (within three months). While an increase in PM 2.5concentration would lead to a modest reduction in spending on necessities (foodand clothing) and in supermarkets in the short-term, likely due to avoidance behavior, there is no longer term impact on either type of transactions.

During and after the talk, scholars from the SEM discussed the key ideas in the paper,and also raised quite a few methodological and empirical questions that provokefurther thinking on the issue from both parties.