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"Air Pollution, Health Spending and Willingness to Pay for Clean Air in China

Understanding the health impact of air pollution and consumer willingness to pay (WTP) for clean air is critical for understanding the benefit of environmental regulations. Based on the universe of credit and debit card transactions in China from 2013 to 2015, this research quantifies the health impacts of PM2.5 and estimates consumer WTP for improved air quality. To our knowledge, this is the first comprehensive analysis of how air pollution affects health spending for the entire population of a developing country. The analysis shows that PM2.5 has significant impacts on health spending in both the short and long term and that consumers exhibit avoidance behavior in spending.