Notice Board

Dr. Chunyang PAN, Assistant Professor, Department of Economics, East China University of Science & Technology

is presenting a talk:

THE PRICE FOR CLEAN AIR: ESTIMATION BASED ON

THE HAPPINESS APPROACH

2:30 - 4:00 pm on FRIDAY, OCTOBER 23, 2015 in C-610 (University Hall)

Air pollution has become one of the most prominent obstacles for China’s sustainable

development. Since air pollution is referred as a public good, how to infer the economic

agent’s marginal willingness to pay (MWTP) for reducing air pollution has been an

important element for designing the optimal environmental protection policy. Using the

happiness approach, a novel method of environmental evaluation, and micro survey data

from China General Social Survey (2003-2013), this paper estimates people’s MWTP in 4

large cities of China. OLS estimation shows a statistical significant and robust negative

effect of air pollution (PM10) on the respondents’ self-reported happiness, which implies

that, on the average, the respondent is willing to pay 700 to 1000 RMB (2010’s price)

per year to reduce PM10 by 1μg/m³. In accordance with the existed empirical

evidences, the result from IV estimation is bigger, almost triple the OLS estimation. It

also investigates the heterogeneity of MWTP in different social groups, and finds that

the rich, the elderly, the higher educated and the CPC members have a higher MWTP

than that of the corresponding groups. These findings shed light on the environmental

policies designing in the new normal stage of China, and also served as a supplement to

the existing MWTP literatures from the developing world.