The Fed of Richmond has published an excellent interview with Janet Currie. Janet has written several high quality papers investigating the consequences of pollution exposure but this work raises the issue of why people choose to expose themselves to pollution. In this blog post, I will pose several possibility and sketch some of my old research.
1. Hypothesis #1; People have rational expectations of how pollution affects them but people differ with respect to their income and poor people choose to live in cheap rent (high pollution) places and are injured by the pollution.
2. Hypothesis #2; Minorities face racial discrimination in housing markets and are forced to live in "bad areas" that often feature high levels of pollution.
3. Hypothesis #3; People are unaware of the consequences of pollution and they are unaware of how areas differ with respect to their pollution so even though there is self selection of neighborhoods, there is a randomization of exposure levels because people are not sorting on this location specific attribute.
4. Hypothesis #4; People live in certain areas and build their social networks there. People face migration costs because they want to remain with their friends. Evolving politics and local industrial shifts lead to noxious sites to pop up in specific areas (i.e to not be uniformly distributed) and this leads certain demographic groups to be exposed to more pollution. For example, blacks disproportionately live in the South Side of Chicago. If a mayor chooses to zone the south side for industrial sites, then blacks will be exposed to more pollution than whites (who tend to live on the Northside).
Let me point you to some of my papers;
Sun, Cong & Kahn, Matthew E. & Zheng, Siqi, 2017. "Self-protection investment exacerbates air pollution exposure inequality in urban China," Ecological Economics, Elsevier, vol. 131(C), pages 468-474.
Siqi Zheng & Jing Cao & Matthew Kahn & Cong Sun, 2014. "Real Estate Valuation and Cross-Boundary Air Pollution Externalities: Evidence from Chinese Cities," The Journal of Real Estate Finance and Economics, Springer, vol. 48(3), pages 398-414, April.
Zheng, Siqi & Kahn, Matthew E., 2008. "Land and residential property markets in a booming economy: New evidence from Beijing," Journal of Urban Economics, Elsevier, vol. 63(2), pages 743-757, March.
Matthew E. Kahn, 2000. "Smog Reduction's Impact on California County Growth," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 565-582.
Denise DiPasquale & Matthew E. Kahn, 1999. "Measuring Neighborhood Investments: An Examination of Community Choice," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(3), pages 389-424.