The Impact of Short Term Exposure to Ambient Air Pollution on Cognitive Performance and Human Capital Formation

Abstract

Cognitive performance is critical to productivity in many occupations and potentially linked to pollution exposure. We evaluate this potentially important relationship by estimating the effect of pollution exposure on standardized test scores among Israeli high school high-stakes tests (2000)(2001)(2002). Since students take multiple exams on multiple days in the same location after each grade, we can adopt a fixed effects strategy estimating models with city, school, and student fixed effects. We focus on fine particulate matter (PM 2.5 ) and carbon monoxide (CO), which are considered to be two of the most dangerous forms of air pollution. We find that while PM 2.5 and CO levels are only weakly correlated with each other, both exhibit a robust negative relationship with test scores. We also find that PM 2.5 , which is thought to be particularly damaging for asthmatics, has a larger negative impact on groups with higher rates of asthma. For CO, which affects neurological functioning, the effect is more homogenous across demographic groups. Furthermore, we find that exposure to either pollutant is associated with a significant decline in the probability of not receiving a Bagrut certificate, which is required for college entrance in Israel. The results suggest that the gain from improving air quality may be underestimated by a narrow focus on health impacts. Insofar as air pollution may lead to reduced cognitive performance, the consequences of pollution may be relevant for a variety of everyday activities that require mental acuity. Moreover, by temporarily lowering the productivity of human capital, high pollution levels lead to allocative inefficiency as students with lower human capital are assigned a higher rank than their more qualified peers. This may lead to inefficient allocation of workers across occupations, and possibly a less productive workforce.

The Effect of Pollution on Worker Productivity: Evidence from Call-Center Workers in China

“…Greater exposure to fine particles is associated with lower intelligence and diminished performance over a range of cognitive domains (Suglia et al, 2008;Power et al, 2011;Weuve et al, 2012). Consistent with this epidemiological evidence, a recent study of Israeli teenagers found that students perform worse on high-stakes exams on days with higher PM levels (Lavy et al, 2014).…”

“…Exposure could impair productivity through changes in cardiovascular and lung functioning (Seaton et al, 1995), irritation of the ear, nose, throat, and lungs (Pope, 2000), as well as through direct impacts on cognitive performance (Lavy et al, 2014).…”

Air Quality and Manufacturing Firm Productivity: Comprehensive Evidence from China

“…Air pollution can also lower cognitive ability, alter emotions, increase anxiety, and have other psychological effects (Lavy, et al, 2014;Pun et al, 2016) which would affect the performance of both physical and knowledge workers. All of these effects can be compounded by spillovers to other workers (Arnott et al, 2005, Chapter 4).…”

“…A few other papers examine pollution's effect on performance in other environments. Air pollution has been found to increase students' absences (Currie et al, 2009) and their cognitive performances and test scores (Lavy, et al, 2014). It also has negative effects on short-run performance of outdoor athletic participants including soccer players (Lichter et al, 2015), marathon runners (Fu and Guo, 2016), and baseball umpires (Archsmith et al, 2016).…”

Every Breath You Take—Every Dollar You’ll Make: The Long-Term Consequences of the Clean Air Act of 1970

“…Moreover, since less advantaged individuals live in more 4 For example, Hanna and Oliva (2011) examine labor supply, while Graff-Zivin and Neidell (2013) study labor productivity. Studies also show that contemporaneous pollution exposure can affect human capital accumulation by increasing school absenteeism (Ransom and Pope, 1992;Gilliland, Berhane, Rappaport, Thomas, Avol, Gauderman, London, Margolis, McConnell, Islam, et al, 2001;Currie, Hanushek, Kahn, Neidell, and Rivkin, 2009), and impairing cognitive performance on high-stakes tests (Lavy, Ebenstein, and Roth, 2012). There is also a possibility that pollution can affect adult income if parents have to forego work to take care of asthmatic children (Currie, Hanushek, Kahn, Neidell, and Rivkin, 2009).…”