The effect of clean air on pharmaceutical expenditures

Airborne emissions are detrimental to health. Low emission zones (LEZs) that restrict pollution-intensive vehicles from entering are popular measures to curb local emissions such as particulate matter. We evaluate how LEZs impact defensive pharmaceutical expenditures. To this end, we use the complet...

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Bibliographic Details
Published in:Economics letters 2020-07, Vol.192, p.109221, Article 109221
Main Authors: Rohlf, Alexander, Holub, Felix, Koch, Nicolas, Ritter, Nolan
Format: Article
Language:English
Subjects:
Air pollution
Airborne particulates
Clean air
Driving ban
Emissions
Emissions control
Expenditures
Health
Health care expenditures
Pharmaceutical expenditures
Pharmaceutical industry
Pharmaceuticals
Pollution
Public health
Quasi-experiment
Quasi-experimental methods
Respiratory diseases
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Summary:Airborne emissions are detrimental to health. Low emission zones (LEZs) that restrict pollution-intensive vehicles from entering are popular measures to curb local emissions such as particulate matter. We evaluate how LEZs impact defensive pharmaceutical expenditures. To this end, we use the complete medical histories of 2.7M individuals insured with Germany’s largest public health insurer AOK. We identify causal effects exploiting the quasi-experimental, staggered introduction of LEZs in 49 cities. We find that LEZs reduce annual pharmaceutical expenditures for heart and respiratory diseases by 15.8M€, representing a significant fraction of policy costs. •Low emission zones (LEZs) ban pollution-intensive vehicles from German cities.•Quasi-experiment based on patient-level data by Germany’s largest health insurer.•LEZs improve air quality by reducing particulate matter by about 5.9%.•LEZs lower drug expenditures for heart and respiratory diseases by 15.8M€ per year.•Reductions in defensive expenditures recover a significant fraction of policy costs.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2020.109221