Yixin Sun, 5th year PhD student, University of Chicago

Despite the enormous health costs of air pollution, willingness-to-pay (WTP) for clean air in highly polluted developing contexts remains very low. We posit that one significant and understudied reason is that clean air is an experience good, whose value is revealed after consumption. We employ a cluster-randomized trial to test this hypothesis. We seek to document the existence of an “experience wedge”, i.e. a difference between anticipated and realized utility of consuming a good. To do this, we deploy a novel experienced-based intervention, air quality monitors and purifiers, which may provide a more salient treatment than traditional information mediums, such as pamphlets or videos. To explore the mechanisms behind the experience wedge, we implement a purifier-only treatment arm to experimentally distinguish between (1) knowledge about objective pollution exposure and (2) the sensory experience of breathing in polluted air. This will be the first experimental evidence demonstrating how experience can shift demand for clean air, offering insights for public health policy and environmental awareness campaigns, while also highlighting the implications for using WTP estimates in economic evaluations.