Air Pollution, Residents’ Happiness, and Environmental Regulation: Evidence from China

Abstract

Using data from the China General Social Survey and data on air pollution, this study explores the impact and the critical path of air pollution on residents’ happiness in China and evaluates whether environmental regulations can alleviate these effects. A probit model is used to analyze the impact of air pollution on residents’ happiness, and wind speed is taken as the instrumental variable of air pollution to overcome endogeneity. A stepwise regression is used to test the critical path of air pollution on residents’ happiness. Finally, the effects of environmental regulations are considered by adding an interaction term between environmental regulation and air pollution. The following conclusions are drawn. First, air pollution can significantly impair residents’ happiness, especially those who have children, are younger, are in poor health, have a lower education level, have lower income, and live in a rural area. Second, there are two critical paths through which air pollution impairs residents’ happiness: mental health level and the frequency of leisure activities. Finally, command-and-control, market-based, and voluntary environmental regulations can all effectively alleviate the impact of air pollution on residents’ happiness.