The Hidden Costs of Crime and Air Pollution

This dissertation focuses on the costs of air pollution and crime. In the first chapter, I address a gap in the literature concerning air pollution’s impacts on human capital formation. I investigate the impact of ambient fine particulate matter on children’s learning using policy-induced variation in air pollution. The North Carolina Clean Smokestacks Act of 2002 mandated emissions reductions from coal-fired power plants. This resulted in utility providers installing pollution mitigating technology on a fraction of the coal-fired power plants in the state. This policy reduced exposure to particulate matter throughout the state but had larger impacts for schools closest to power plants. Using this quasi-experimental variation and an Instrument Variable approach, I find that reduction in air pollution significantly increased academic gains for students in grades four through eight. A one microgram per cubic meter drop in particulate matter results in improvements of 4.8% and 4.0% of a standard deviation in math and reading respectively. The results indicate that air quality can significantly impact human capital. In the second chapter, I challenge past claims that avoidance behavior associated with crime imposes large costs on society. The previous literature, based on survey evidence, showed that individuals avoid public transportation due to crime. This can lead to welfare losses for public transportation riders and lost revenue for the transit authority. Using a Difference-in-Difference style identification strategy, I investigate the impact of violent crime at Chicago Transit Authority metro train stations on train ridership. Results indicate that crime does not impact ridership in the short-term, even in the most sensitive of groups such as students, seniors, and weekend riders. This evidence implies that the cost of avoidance behavior may not be as large as previously suspected. Future cost of crime estimates may not need to be adjusted for avoidance behavior costs.