Fresh Air Eases Work - The Effect of Air Quality on Individual Investor Activity

• Published in: NBER Working Paper Series p. 24048
• Main Authors: Meyer, Steffen, Pagel, Michaela
• Format: Paper
• Language: English
• Published: Cambridge National Bureau of Economic Research, Inc 01.11.2017
• Subjects: Economic theory; Standard deviation
• ISSN: 0898-2937
• DOI: 10.3386/w24048

Working Paper No. 24048 This paper shows that air quality has a significantly negative effect on the likelihood of individual investors to sit down, log in, and trade in their brokerage accounts controlling for investor-, weather-, traffic-, and market-specific factors. In perspective, a one standard deviation increase in fine particulate matter leads to the same reduction in the probability of logging in and trading as a one standard deviation increase in sunshine. We document this effect for low levels of pollution that are commonly found throughout the developed world. As individual investor trading can be a proxy for everyday cognitively-demanding tasks such as office work, our findings suggest that the negative effects of pollution on white-collar work productivity are much more severe than previously thought. To our knowledge, this is the first study to demonstrate a negative impact of pollution on a measure of white-collar productivity at the individual level in a western country.