Valuing Air Quality Using the Life Satisfaction Approach

“Subsequent geographical research with objective indicators has explored inequality and social justice in how well-being relates to environmental characteristics, both built (Luechinger, 2009; Stutzer & Frey, 2008) and social (Pacione, 2003).”

“…found that the effect of air pollution on SWB involved the comparison of people from polluted and non-polluted areas (e.g., Bullinger, 1989; Ferreira et al., 2013; Li et al., 2014; Luechinger, 2009, 2010; MacKerron & Mourato, 2009; Rehdanz & Maddison, 2008; Welsch, 2006; Zeidner & Shechter, 1988).”

“…et al. (2008), Ferreira et al. (2013), Ferrer-i-Carbonell and Gowdy (2007), Frey et al. (2010), Gowdy (2005), Kubiszewski et al. (2013), Levinson (2012), Luechinger (2009), MacKerron and Mourato (2009), Vemuri and Costanza (2006), Welsch (2009), Welsch and Kuehling (2009), and White et al. (2013).”

“For example, Luechinger (2009) estimates the total willingness to pay for air quality [sulfur dioxide (SO2) concentration] by adding up the value that is estimated from a satisfaction regression and the 25For empirical applications of equivalent incomes to compare living standards (levels and/or…”

“This article refers to the “inverse distance weighted interpolation” method advocated by Luechinger [39] and Chen et al. [40] to calculate the air quality index between each cell.”

“, 2008; Ferrer-iCarbonell and Gowdy, 2007), while proximity to a landfill or an airport, and poor air quality have been shown to adversely affect well-being (van Praag and Baarsma, 2005; Brereton et al., 2008; Ferreira et al., 2012; Luechinger, 2009; MacKerron and Mourato, 2009; Welsch, 2006, 2007).”

“…estimation of monetary values or income equivalent figures for the contribution of the environment to one’s subjectively measured well-being (cf. Ambrey and Fleming 2011, 2012, 2014b, c; Ambrey et al. 2014; Welsch 2002, 2006, 2007, among others; Luechinger 2009, 2010; MacKerron and Mourato 2009).”

“The SWB approach has previously been applied to environmental issues (e.g. Welsch 2002, 2006; Rehdanz and Madison 2005; van Praag and Barsma 2005; Luechinger 2009; Ferreira and Moro 2010; Levinson 2012) and to various societal phenomena, including inflation and unemployment (Di Tella et al.”

“This contributes to large marginal willingness-to-pay estimates (Luechinger 2009).”

“Luechinger, Meier, and Stutzer (2010), for example, find that an increase in regional unemployment substantially reduces the reported life satisfaction of the people who currently work.”

“Luechinger (2010) also observed a negative impact on LS.”

“Consistent with earlier literature (LUECHINGER, 2009; VAN PRAAG and BAARSMA, 2005), the results challenge the validity of the assumption of equilibrium in housing and wage markets, which underpins many models that rely on choice.”

“Our study also relates to the broader literature on the effect of air pollution on a wide variety of topics which range from happiness and mental well-being (Luechinger 2009; Levinson 2012; Zhang, Zhang, and Chen 2015) to labor productivity (Graff Zivin and Neidell 2012; Chang et al.”

“Environmental disamenities such as air pollution (Levinson, 2009; Luechinger, 2009; MacKerron and Mourato, 2009; Welsch, 2002, 2006) and aircraft noise (van Praag and Baarsma, 2005); climatic characteristics (Murray et al, 2011; Rehdanz and Maddison, 2005), and weather (Barrington-Leigh, 2008) have…”

“The Luechinger (2010) study covers 12 European countries in the period 1974-1997, while Luechinger (2009) estimates the effect of SO2 using a panel of individuals in 450 German counties during 1985-2003.”

“Simon Luechinger (2009), 'Valuing Air Quality Using the Life Satisfaction Approach', Economic Journal, 119 (536), March, 482-515 388 PART V UTILITY MISPREDICTION AND ADAPTATION 15.”

“Therefore, this approach is very similar to the Life Satisfaction Evaluation (LSE) approach (Luechinger 2009; Luechinger and Raschky 2009; Ferreira et al. 2013; Chongvilaivan and Powdthavee 2012; Giovanis 2014).”

“The first is life satisfaction (Welsch 2006, 2007; Rehdanz and Maddison 2008; MacKerron and Mourato 2009; Luechinger 2009, 2010; Menz 2011; Ferreira et al. 2013).”

“However, several authors have used life satisfaction as a proxy of instantaneous utility or individual welfare to value public goods such as air pollution or security (Frey et al., 2009; Luechinger, 2009).”

“[11] Luechinger, Simon (2009) “Valuing Air Quality Using the Life Satisfaction Approach,”Economic Journal, 119, No.”

“Green and Heywood (2014) transform the satisfaction scales by the probit adapted OLS (POLS) method advocated by van Praag and Ferrer-i-Carbonell (2008: 29-34); see also Luechinger (2009) for a different application and interpretation of that method.”

“Studies also find that air pollution tends to reduce people’s life satisfaction (Welsch, 2002, 2006; MacKerron and Mourato, 2009; Luechinger, 2009, 2010; Li et al., 2014), and happiness (Levinson, 2012; Zhang et al., 2017; Zheng et al., 2019), and even to lead to mental disorders such as depression…”

“Other studies have focused on the relation between disability shocks and well-being (Oswald and Powdthavee, 2008), environmental shocks (Luechinger, 2009), divorce effects (Lucas, 2005; Gardner and Oswald, 2006), and the effects of winning the lottery (Gardner and Oswald, 2007).”

“Other papers use more spatially-disaggregated pollution data, along with individualbased measures of SWB concentrating on just one country or area: Cuñado and PérezGracia (2013) for Spain, Brereton et al. (2008) and Ferreira et al. (2006) for Ireland, Ferrer-i-Carbonell and Gowdy (2007) for the UK, Levinson (2012) for…”

“Generally, both OLS and probit-OLS have been compared with the ordered models and no difference has been found among them (Van Praag and Ferrer-i-Carbonell 2006; Luechinger 2009, 2010; Stevenson and Wolfers 2008; Wunder and Schwarze 2010).”

“2013), SO2 (Smyth et al. 2008; Luechinger 2009; Ferreira et al. 2013), and NO2 (Welsch 2006; MacKerron and Mourato 2009; Petrowski et al.”

“The LSA has further been developed by Luechinger (2009) to value the negative consequences of sulfur dioxide in Germany.”

“Many studies use residents’ self-reported life satisfaction or subjective well-being (SWB) to measure happiness and connect this with urban amenities such as air quality, climate, and urban growth (Luechinger, 2009; Ferreira and Moro, 2010; Glaeser et al., 2016).”

“…of air quality that is capitalized in the German housing market amounts to about 20% of the value found when using the life satisfaction approach (Luechinger 2009b).26 The latter result applies even when controlling for individual fixed effects, which we are unable to do since our data comes…”

“Some scholars highlighted that the subjective perception of air pollution was significantly and negatively associated with the LS in Europe, Asian, and South American countries based on the individual-level or country-level data (Ferreira & Moro, 2010; Luechinger, 2009, 2010; Menz, 2011).”

“The latter choice was inspired particularly by the seminal paper of Luechinger (2009); he uses wind direction and power-plant location, whereas we use wind direction and the fact that air from the Atlantic Ocean is clean.”

“, informal care (van den Berg & i Carbonell, 2007), death of a loved one (Deaton et al., 2009; Oswald & Powdthavee, 2007), urban re-newal (Dolan & Metcalfe, 2008), air quality (Levinson, 2012; Luechinger, 2009; van Praag & Baarsma, 2001) and terrorism (Frey et al., 2004).”

“2019), to its usefulness to calculate the value of nonmarket goods with the compensating variation approach (Welsch 2002 and Luechinger 2009; Luechinger and Raschky 2009; van Praag and Baarsma 2005; Frey et al.”

“Luechinger used the German Socio-Economic Panel (GSOEP) containing information on individual life satisfaction to examine the impact of air pollution on life satisfaction [46].”

“…climate, floods, droughts, and proximity to waste facilities, coastlines, and transportation routes (Welsch 2002, 2006; van Praag and Baarsma 2005; Brereton, Clinch, and Ferreira 2008; Carroll, Frijters, and Shields 2009; Luechinger 2009; Luechinger and Raschky 2009; MacKerron and Mourato 2009).”

“Air pollution, which has objective indicators, such as air pollutants including SO2, NO2, and PM10, is significantly and negatively associated with the life satisfaction [8, 12, 17, 82, 84, 86].”

“Some authors take the view that the life satisfaction approach values only the residual benefits (or costs) of the non-market good not captured in housing or labour markets (cf. Luechinger, 2009; van Praag & Baarsma, 2005).”

“For example, in a study of the effects of air quality on life satisfaction, it was found that the life satisfaction of environmentally aware people was more affected by air pollution than others (Luechinger, 2009).”

“According to the CGSS data, good health status had positive effect on happiness [8,51].”

“9 The Life Satisfaction Approach has, among other applications, been used to value airport noise nuisance (van Praag and Baarsma, 2005), air pollution (Welsch, 2006; Luechinger, 2009; Levinson, 2012), crime (Manning et al.”

“2 (Easterlin, 1974; 1995); and whether we can figure out a better way to value nonmarket goods such as health and the environment (Van Praag & Baarsma, 2005; Luechinger, 2009; Powdthavee & Van Den Berg, 2011).”

“Luechinger (2009) uses individual-level panel data from the German SOEP and combines them with SO2 data at the county level over a nineteenyear period (1985–2003).1 To control for the simultaneity of local air quality and regional economic conditions, he uses exogenous environmental regulation,…”

“The study by Luechinger (41) collected the data on SO2 concentration for about 20 years obtained from 553 German monitor stations and SWB data from SOEP survey for the same period.”

“…and Oswald, 2004; Ferrer-I-Carbonell and Frijters, 2004; Booth and van Ours, 2008; DiTella and MacCulloch, 2008; Fafchamps and Shilpi, 2008; Luechinger, 2009; Clark and Senik, 2010; Nunn and Wantchekon, 2011; Verme, 2011; Benjamin et al., 2012; Kahneman and Deaton, 2010; Clark et al.,…”

“3 SWB approaches have been applied to different fields, e.g., health care (Ferrer-i Carbonell and van Praag, 2002), social science (Frey and Stutzer, 2002), evaluation of public goods (Luechinger, 2009) and energy provision mix (Welsch and Biermann, 2014a,b).”

“Recently, these methods have also been applied by Luechinger (2009), Stevenson and Wolfers (2008), and Pischke (2010).”

“These are impacts of significant magnitude, which are also verified by numerous other studies (e.g. Brereton et al., 2008; Frey et al., 2009; Luechinger, 2009; Moro et al., 2008; Powdthavee, 2008; Welsch, 2002, 2006; Zimmermann and Easterlin, 2006).”