We estimate the impacts of temperature on time allocation by exploiting plausibly exogenous variation in temperature over time within counties. Temperature increases at the higher end of the distribution reduce hours worked in industries with high exposure to climate and reduce time allocated to outdoor leisure for the nonemployed, with this time reallocated to indoor leisure. At the lower end of the distribution, time allocated to labor is nonresponsive to temperature increases, but outdoor leisure increases while indoor leisure decreases as temperature warms. We also find suggestive evidence of short-run adaptation to higher temperatures through temporal substitutions and acclimatization.

In this review, we discuss three major contributions economists have made to our understanding of the relationship between the environment and individual well-being. First, in explicitly recognizing how optimizing behavior, particularly in the form of residential sorting, can lead to nonrandom assignment of pollution, economists have employed a wide range of quasi-experimental techniques to develop causal estimates of the effect of pollution. Second, economic research has placed a considerable focus on the role of avoidance behavior, which is an important component for understanding the difference between biological and behavioral effects of pollution and for proper welfare calculations. Lastly, economic research has expanded the focus of analysis beyond traditional health outcomes to include measures of human capital, including labor supply, productivity, and cognition. Our review of the quasi-experimental evidence on this topic suggests that pollution does indeed have a wide range of effects on individual well-being, even at levels well below current regulatory standards. Given the importance of health and human capital as an engine for economic growth, these findings underscore the role of environmental conditions as an important factor of production. (JEL I12, I31, J24, Q51, Q53)

We examine the impact of air pollution on infant death in California over the 1990s. Our work offers several innovations: First, many previous studies examine populations subject to far greater levels of pollution. In contrast, the experience of California in the 1990s is clearly relevant to current debates over the regulation of pollution. Second, many studies examine a few routinely monitored pollutants in isolation, generally because of data limitations. We examine four criteria pollutants in a common framework. Third, we develop an identification strategy based on within zip code variation in pollution levels that controls for potentially important unobserved characteristics of high pollution areas. Fourth, we use rich individual-level data to investigate effects of pollution on infant mortality, fetal deaths, low birth weight and prematurity in a common framework. We find that the reductions in carbon monoxide (CO) and particulates (PM10) over the 1990s in California saved over 1,000 infant lives. However, we find little consistent evidence of pollution effects on fetal deaths, low birth weight or short gestation.

We examine peer effects in early education by estimating value-added models with school fixed effects that control extensively for individual, family, peer, and teacher characteristics to account for the endogeneity of peer group formation. We find statistically significant and robust spillover effects from preschool on math and reading outcomes, but statistically insignificant effects on various behavioral and social outcomes. We also find that peer externalizing problems, which most likely capture classroom disturbance, hinder cognitive outcomes. Our estimates imply that ignoring spillover effects significantly understates the social returns to preschool.

We examine the impact of poor water quality on avoidance behavior by estimating the change in bottled water purchases in response to drinking water violations. Using data from a national grocery chain matched with water quality violations, we find an increase in bottled water sales of 22 percent from violations due to microorganisms and 17 percent from violations due to elements and chemicals. Back-of-the envelope calculations yield costs of avoidance behavior at roughly $60 million for all nationwide violations in 2005, which likely reflects a significant understatement of the total willingness to pay to eliminate violations.

We examine the effect of air pollution on school absences using administrative data for elementary and middle school children in 39 of the largest school districts in Texas merged with air quality information maintained by the Environmental Protection Agency. We address potentially confounding factors with a difference-in-difference-in-differences strategy that controls for persistent characteristics of schools, years, and attendance periods. Of the pollutants considered, we find that high carbon monoxide (CO) levels, even when below federal air quality standards, significantly increase absences. Our results suggest that the substantial decline in CO levels over the past two decades has yielded economically significant health benefits.