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- [Alex] Everyone knows that pollution is bad.
The WHO estimates that air pollution alone kills
about 6.5 million people a year.
That's 10% of all deaths, and more than AIDS, malaria,
and tuberculosis combined.
In recent years however, better more credible research
from economists and others has taught us that pollution --
it's even worse than we thought.
I'm going to cover a few
of the most interesting studies in this video.
Infants born in places with a lot of pollution --
they tend to be born with worse health,
more premature births and lower birth weight, for example.
But infants born in places with worse pollution --
they also tend to be different in other ways.
They're born to poorer families.
So what's causing the health problems?
Is it the pollution or is it the poverty?
One way to tell would be to run an experiment,
to randomly assign pregnant women --
some to high pollution areas, others to low pollution areas,
and then after some time,
to compare the health of their infants.
Probably not too many women would volunteer for that experiment.
The introduction of the E-ZPass in New Jersey and Pennsylvania
around the year 2000, however,
created an ingenious natural experiment.
Now some of you might remember the old toll booths,
where cars had to slow down,
give their money to a toll booth worker, get change.
That meant long delays, lots of congestion,
and lots of pollution near toll booths.
That all changed with the introduction
of electronic tolling, E-ZPass.
Long lines at the toll booth were eliminated
as cars zipped though fast lanes creating much less local pollution.
The economists Janet Currie and Reed Walker --
they collected information about the health of infants
born near toll booths before and after
the introduction of E-ZPass.
Infants born near toll booths -- they're the treatment group
because these infants were exposed to much more pollution
before E-ZPass than after E-ZPass.
Other factors, however -- they might be changing through time.
So to control for these other factors,
Currie and Walker found a group of infants who were born
more than 2 kilometers away from the toll booth,
but less than 10 kilometers away,
and within 3 kilometers of a major highway.
Now these infants -- they don't live near enough
to the toll booth to be affected by the change in pollution
but they do live near enough to the toll booth
and a major highway to form a good control group,
a group that is likely to have similar dynamics
to the treatment group.
So this is called a difference in difference design
because it compares the difference in infant health
of the treatment group before and after E-ZPass
to the difference in infant health of the control group
before and after E-ZPass.
If the control group has similar dynamics
to the treatment group this difference in difference method
will produce a causal estimate of the impact of air pollution
on infant health.
Using this method, Currie and Walker found that the introduction
of E-ZPass reduced low birthweight babies by about 8.5%,
and premature births by about 7.5%.
They also found that the effects were largest for the infants born
closest to the toll booth, a dose-response effect.
These are big effects, especially as being born
with low birthweight or being born premature --
that can have effects such as lower IQ and worse health
that last a lifetime.
Pollution, of course, doesn't just affect infants.
Three economists measured pollution
at a series of chess tournaments in Germany.
They compared each player's moves
with the moves that the player should have made
according to the world's greatest player of chess --
Magnus Carlsen?
No, the Stockfish 9 AI.
And what they discovered is that the human players --
they made more mistakes on days with higher pollution.
And other studies have found similar results.
Call center workers in China --
they're less productive on high pollution days.
Even baseball umpires have been found to make more errors
calling balls and strikes when pollution is high.
What we're learning from a wide variety of studies
is that pollution reduces health, IQ, productivity, and employment.
In other words, pollution is an attack on human capital,
and human capital is the most important input
to the economy.
And what that means is
that less pollution can mean more GDP.
We may be on the wrong side of the pollution Laffer curve.
And if less pollution can mean more GDP
even in a relatively low pollution society
like the United States,
then this probably doubly and triply true
in high pollution societies,
like China, and especially, India.
In one sense, this news is bad.
Pollution is making us sick and stupid.
In another sense, the news is good.
Pollution is so bad that reducing it
can make us healthier and wealthier.
And we have the technologies to reduce pollution,
like using solar, nuclear, and natural gas.
And now, new research shows
that the benefits of reducing pollution --
it could be much greater than we previously imagined.
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- [Narrator] Ready to keep learning?
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Also economists call pollution an "externality."
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