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Environment and Happiness: Valuation of Air Pollution in Ten European Countries

Discussion Papers 356, 17 S.

Heinz Welsch

2003. Jul.

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This paper uses a set of panel data from happiness surveys, jointly with data on per capita income and pollution, to examine how self-reported well-being varies with prosperity and environmental conditions. This approach permits to show that citizens care about prosperity and the environment, and to calculate the trade-off people are willing to make between them. The paper finds that air pollution plays a statistically significant role as a predictor of intercountry and inter-temporal differences in subjective well-being. The effect of air pollution on well-being shows up as a considerable monetary valuation of improved air quality. The air quality improvements achieved in Western Europe in 1990-1997 are valued at almost $900 per capita per year in the case of nitrogen dioxide and more than $1400 per capita per year in the case of lead.

Topics: Well-being, Europe

JEL-Classification: Q2
Keywords: pollution; environmental valuation; subjective well-being; marginal rate of substitution
Frei zugängliche Version: (econstor)