The adverse impact of haze on health and its association with a range of economic outcomes has received increasing attention in the literature. A natural laboratory experiment involving more than 600 subjects enables a first attempt at investigating the causal effect of haze proxied by Particulate Matters 2.5 (PM2.5) directly on decision making. This study was conducted in Beijing over five days with highly varying levels of PM2.5 in October 2012, before this measure became commonly known in China the next year. We observed several effects of an increase in PM2.5. In individual decision making, we found an increase in aversion to risk and to ambiguity over gains and in risk tolerance over losses together with greater impatience when discounting over a remote comparison. In other-regarding behavior, subjects became less prosocial: giving less in a dictator game, contributing less in a public goods game, reciprocating less in a sequential prisoners’ dilemma, and demanding more as responder in an ultimatum game. In strategic thinking, there was greater deviation from dominant-strategy bidding behavior in a second-price auction and a decline in iterative thinking in a p-Beauty game. Taken together, our results provide a preferential foundation to several papers linking short term variations in air quality to real-world economic variables including the performance of stock markets, worker productivity, and criminal activities.
Chew Soo Hong is professor and provost’s chair at the National University of Singapore (NUS). He received his Ph.D. in interdisciplinary studies from the University of British Columbia and has previously taught at the Hong Kong University of Science and Technology, University of California, Irvine, Johns Hopkins University and University of Arizona. Chew is co-director of NUS’ lab for Behavioral x Biological Economics and the Social Sciences which aims to bring together genomics, neuroscience, decision theory, and behavioural and experimental economics to seek a deeper understanding of decision making at the neural and molecular levels. He is among the pioneers in axiomatic non-expected utility models and is a fellow of the Econometric Society which awarded him the Leonard J. Savage thesis prize. Chew has published in well-regarded journals in economics such as Econometrica, Review of Economic Studies, Journal of Economic Theory as well as biology-oriented ones including PNAS, PRSB, Neuron, and Neuroimage.