The Impact of Ambient Fine Particulate Matter on Consumer Expenditures

Abstract

Airborne particulate matter suspended from industrial facilities, power plants, and automobiles is detrimental to health. Growing concerns about the increasing level of airborne particulate matter have led many industrialized nations to advocate for the transformation of the energy market and investment in sustainable energy products. At the other end, consumers have made individual adjustments and attempted to reduce the exposure to the particulate matter. In this paper, we focus on the effect of ambient air pollution on consumer expenditures based on scanner panel data on consumers' debit and credit card transactions. A series of empirical analyses found robust evidence that the increased level of particulate matter led to considerable disruption in total consumer expenditures with significant heterogeneity across categories. Our findings suggest that consumers alter their spending behaviors in an attempt to reduce the risk of exposures to particulate matter. Such an estimated effect of air pollution is qualitatively different from those of other macroeconomic factors and provides important guidance for policy interventions and practical decisions aimed at sustaining economic growth.Sustainability 2020, 12, 1855 2 of 13 disruption in willingness to buy in all categories. Instead, positive as well as negative spillover effects may simultaneously occur in consumption across categories.Given this notion, we aim to examine how the increased level of air pollution influences consumer behaviors in this paper. Empirical knowledge on such an indirect but significant effect of ambient air pollution on consumer behaviors is particularly valuable in that its implication would provide important guidance to policy makers, as well as firms' decision makers. Note that the extrapolation from the effects of other macroeconomic effects would yield a misspecification of the impact of air pollution [17,18].Surprisingly, however, little has been known about the effect of ambient air pollution on individual shopping behaviors and consumption, primarily because restrictions imposed on the data disable the measurement of indirect and behavioral effects of air pollution. In this paper, we explore the economic effect of air pollution based on a unique set of data. We include substantial knowledge on how the increased level of particulate matter impacts the individual consumption and shopping behaviors.The paper proceeds as follows: Section 2 discusses the related literature, Section 3 explains the data, Section 4 describes preliminary analyses, and Section 5 presents the estimation methods and results. Finally, Section 6 concludes with a summary of our findings.

Sales in Commercial Alleys and Their Association with Air Pollution: Case Study in South Korea

“…The feature importance analysis revealed a striking shift in the importance of PM 10 as a predictor of quarterly sales before and during the COVID-19 pandemic. Pre-pandemic, PM 10 ranked as the 10th most important feature, highlighting its importance to sales forecasting [46]. This suggested that, in the absence of external shocks, environmental factors like air quality played a noteworthy role in shaping sales predictions [47].…”