NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Hazed and Confused: The Effect of Air Pollution on Dementia

Kelly C. Bishop, Jonathan D. Ketcham, Nicolai V. Kuminoff

NBER Working Paper No. 24970
Issued in August 2018
NBER Program(s):Aging, Environment and Energy Economics, Health Economics

We test whether long-term exposure to air pollution degrades human capital by causing dementia. We link fifteen years of Medicare records for 6.9 million adults age 65 and older to the EPA’s air quality monitoring network and track the evolution of individuals’ health, onset of dementia, financial decisions, and cumulative residential exposure to fine-particulate air pollution (PM2.5). Our instrumental variables framework capitalizes on quasi-random variation in pollution exposure due to the EPA’s 2005 designation of nonattainment counties for PM2.5. We find that a 1 microgram-per-cubic-meter increase in average decadal exposure (9.1% of the mean) increases the probability of receiving a dementia diagnosis by 1.3 percentage points (6.7% of the mean). This finding is consistent with hypotheses from the medical literature. We conclude that regulation of air pollution has greater benefits than previously known, in part because dementia impairs financial decision making. We estimate that the dementia-related benefits of the EPA’s county nonattainment designations exceeded $150 billion. We also find that the effect of PM2.5 on dementia persists below current regulatory thresholds.

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Document Object Identifier (DOI): 10.3386/w24970

 
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