Carnegie Mellon University

The Impact of Environmental Negligence on Economic Disparity

Nicholas Z. Mueller, Tepper School Associate Professor of Economics, Engineering, and Public Policy, speaks about his research on the impact environmental negligence has on economic disparity.

Video Transcript

My research focuses on the economic value of things like air pollution. When we think about gauging the status of a society's performance and its economic output, we tend to focus on things like market income, when we know there are other things that contribute to our welfare, like environmental quality, and pollution, and public goods.

The title of my paper is "The Distribution of Income Is Worse Than You Think," and what we were doing in this paper is thinking about the different levels of air pollution as different levels of public goods. And when you value the impacts from air pollution, it's a monetary deduction from, effectively, your net income.

We take the official income statistics from the Census Department, deducting a certain amount for each household, that's variable based on that household's health status, where they live, and the pollution exposure that they're subject to. In that adjusted measure of income, the U.S.'s distribution of income looks like Haiti or South Africa.

It would have been a lot worse, in say 2008 and 2010, than it is today. Pollution policy has reduced the levels, and as I suggested, it reduces the inequality in exposure just by virtue of how those policies tend to work targeting big, stationary sources like power plants, and factories, and mills, and things like that.

The link between your exposure to these things as an outdoor air pollutant and adverse health effects —  either illnesses, work absences, school absences for children, or ultimately premature death — that we're picking up, that then when monetized, gives us this picture of a much more unequal society.