The Effect of Air Pollution on Criminal Activities: Evidence from the NOx Budget Trading Program

The Effect of Air Pollution on Criminal Activities: Evidence from the NOx Budget Trading Program

Regional Science and Urban Economics

Abstract

This paper examines the impacts of air pollution on criminal activities by exploiting three dimensions of variations observed under a rich quasi-experiment: the NOx Budget Trading Program. This program has been well documented to decrease air pollution concentrations in participating states. Employing a triple-difference estimator, we find evidence showing that the program significantly reduced violent and property crimes in participating states by roughly 3.7% and 2.9%, respectively. Instrumental variable estimates suggest that lowering air pollution may play an important role in reducing criminal behaviors.

JEL classification: K42; Q51; Q58

Keywords: Air pollution; Criminal activities; NOx; Budget Trading Program