Information, migration, and the value of clean air

Using a variant of the Rosen-Roback model of inter-city migration that incorporates public access to air quality information, we demonstrate that information constraints create a wedge between revealed and true hedonic prices for pollution that depends upon individuals’ perception biases. We empiric...

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Bibliographic Details
Published inJournal of development economics Vol. 163; p. 103079
Main Authors Gao, Xuwen, Song, Ran, Timmins, Christopher
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.06.2023
Subjects
Compensating differential
Information
Migration
Particulate matter
Rosen-Roback
J61
Migration
Particulate matter
Information
Q51
Rosen-Roback
Compensating differential
D83
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Summary:Using a variant of the Rosen-Roback model of inter-city migration that incorporates public access to air quality information, we demonstrate that information constraints create a wedge between revealed and true hedonic prices for pollution that depends upon individuals’ perception biases. We empirically test our theoretical predictions by leveraging the unexpected disclosure of PM2.5 data in China. We find that migration decisions become much more responsive to pollution and that the hedonic price of avoiding PM2.5 exposure nearly doubles – from 171 to 336 Chinese Yuan – in response to the information shock. Our results highlight the role of imperfect information in migration decisions and its impact on non-market valuation in countries where public access to information is restricted. •Imperfect information distorts migration decisions.•We leverage the unexpected disclosure of PM2.5 data in China.•The information shock induces people to leave polluted cities.•The MWTP of PM2.5 exposure increases from 171 to 336 Chinese Yuan.
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2023.103079