When Particulate Matter Strikes Cities: Social Disparities and Health Costs of Air Pollution

We investigate the heterogeneous effects of particle pollution on Italian daily hospitalizations and their costs by exploiting public transportation strikes as plausibly-exogenous shocks in pollution exposure. We find that a one standard deviation increase in PM causes additional 0.79 hospitalizations per 100,000 residents, and the effect is stronger for the elderly, low educated individuals and migrants. Furthermore, we find that young individuals, an arguably healthy age group, exhibit economically meaningful responses to air pollution with an effect ranging between 0.45 and 1.04. Our results imply a large role of avoidance behavior driving heterogeneous marginal health effects. Total daily costs of a one standard deviation increase in PM represent 0.5% of the total daily health expenditure, and 85% of this additional spending comes from more patients hospitalized, while the remaining 15% can be attributable to more costly, and likely more complex, hospitalizations.