By Diana Schoder
When air pollution becomes a problem, we find ways of protecting ourselves. We spend less time outside, shut the windows, or use asthma medication.
These solutions are called defensive investments. They help us to avoid harm, but they can be costly — in terms of both time and money.
In the October issue of the American Economic Review, Michael Greenstone and his co-authors Olivier Deschênes and Joseph Shapiro look at what happened to asthma medication usage, one common but expensive defensive investment, when a cap-and-trade program reduced air pollution throughout the Northeast.
Greenstone recently spoke with the American Economic Association about the success of the NOx (Nitrogen Oxides) Budget Trading Program, America’s air quality, and why defensive investments should matter more to economists and policymakers.
A transcript edited for length and clarity follows, and you can listen to the full interview, here.
Continue reading at the American Economic Association…