Research / BFI Working PaperJun 29, 2020

Can Technology Solve the Principal-Agent Problem? Evidence from China’s War on Air Pollution

Michael Greenstone, Guojun He, Ruixue Jia, Tong Liu

We examine the introduction of automatic air pollution monitoring, which is a central feature of China’s “war on pollution.” Exploiting 654 regression discontinuity designs based on city-level variation in the day that monitoring was automated, we find that reported PM10 concentrations increased by 35% immediately post–automation and were sustained. City-level variation in underreporting is negatively correlated with income per capita and positively correlated with true pre-automation PM10 concentrations. Further, automation’s introduction increased online searches for face masks and air filters, suggesting that the biased and imperfect pre-automation information imposed welfare costs by leading to suboptimal purchases of protective goods.

Additional Materials

More Research From These Scholars

BFI Working Paper Dec 20, 2016

The Local Economic and Welfare Consequences of Hydraulic Fracturing

Michael Greenstone, Alexander W. Bartik, Janet Currie, Christopher R. Knittel
Topics:  Energy & Environment, Health care
BFI Working Paper Apr 1, 2017

Measuring the Welfare Effects of Residential Energy Efficiency Programs with Self-Selection into Program Participation

Michael Greenstone, Hunt Allcott
Topics:  Energy & Environment
BFI Working Paper Feb 1, 2015

Growth, Pollution, and Life Expectancy: China from 1991-2012

Avraham Ebenstein, Maoyong Fan, Michael Greenstone, Guojun He, Peng Yin, Maigeng Zhou
Topics:  Energy & Environment, Health care