In the opinions of many, policies put in place to enforce the reduction in carbon emissions and pollution stifle economic productivity. “Dirty” industries incur higher costs and have to lay off workers or close down entirely, resulting in unemployment and loss of income for the people living in areas that depend on these industries for work.
However, three economists from the National bureau of economic research, Maya Rossin-Slater, Adam Isen and W. Reed Walker conducted a study to disprove this common belief. They compared labour market statistics on people who were born in areas where air pollution was decreased as a result of the Clean Air Act of 1970 to those who were born in areas where pollution did not fall. Those born in areas with cleaner air and reduced pollution earned on average about $4,300 extra over a lifetime than those born and raised in more polluted areas.
The argument of the study was to show that the long term benefits of environmental policies actually improve economic success in individuals. Cleaner air and environment leads to better childhood health, development and therefore a higher likelihood to achieve success in other aspects of life such as job performance and salary.
The “fetal origins hypothesis” is a belief that being born during a famine or an economic depression can reduce adult life expectancy and increases chances of diabetes and heart disease in old age. Supporters of this hypotheses firmly believe that exposure to pollution at a young age may affect individuals for the rest of their lives.
This study begs the question: do the positive long term affects outweigh the negatives? There are many factors that the study didn’t talk about. How many jobs were lost when these industries conducted huge layoffs or closed down? Did people who lost these jobs find work again easily? How long were they unemployed for? Did they miss out on good benefits like health insurance which could have been detrimental to their health as much as higher levels of pollution could have been? Is an extra $4300 over a lifetime per person a significant enough amount to justify all the losses incurred when big businesses take a hit? There are many external factors to examine before the real net benefits or costs can be claimed. Perhaps this might be a great case study for your next public policy paper?
Study Source: "A. Isen, M. Rossin-Slater and R. Walker, "Every breath you take—every dollar you'll make: the long-term consequences of the Clean Air Act of 1970", NBER working paper 19858, January 2014.
Written by Barbara Jung, Marketing Director of UW Economics Society
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