Review of Finance Vol. 28 No. 3 2024

Fresh air eases work—the effect of air quality on individual investor activity

Steffen Meyer^1,2; Michaela Pagel^3,4,5

¹ Aarhus University , Fuglesangs Allé 4 , Aarhus 8210, · ² Danish Finance Institute (DFI) , Solbjerg Plads 3, Frederiksberg 2000, · ³ Olin Business School, Washington University in St. Louis , One Brookings Drive , St. Louis, Missouri, 63112, · ⁴ NBER , 1050 Massachusetts Avenue , Cambridge, Massachusetts, 02138, · ⁵ CEPR , 187 boulevard Saint-Germain , Paris, 75007,

Abstract

This article shows that contemporaneous and lagged air pollution negatively affects the likelihood of German individual investors to log in and trade in their brokerage accounts, using intraday data and controlling for investor-, weather-, traffic-, and market-specific factors. A 1 SD increase in air pollution leads to a 1.3 percent reduction in the probability of logging in, which is larger than the response to a 1 SD increase in sunshine. We argue that changes in air pollution affect productivity in cognitively demanding tasks, such as trading. Our results are robust to macroeconomic productivity shocks, nonlinearities, or measurement error.

DOI

10.1093/rof/rfae005

Volume

28

Issue

3

Pages

1105-1149

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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