Air pollution monitoring and avoidance behavior: Evidence from the health insurance market

Previous studies have often focused on the direct benefits of environmental regulations on health. This paper quantifies the impact of environmental regulations on the cost of prevention for urban residents. The purpose of this study is to examine how environmental regulations affect urban commercial health insurance purchases. Air pollution monitoring stations in China capture exogenous air quality changes to overcome potential endogenous problems. Evidence shows that an increase in the operating days of air pollution monitoring stations will reduce the purchase of commercial health insurance in the city. The mechanism is that the operation of air pollution monitoring stations is conducive to improving local air quality and alleviating residents' health prevention needs. Heterogeneity analysis shows that the impact of air pollution monitoring station operation on the cost of prevention is less effective in more developed cities. Finally, we demonstrate that the number of claims for commercial health insurance dropped with the operation of air pollution monitoring stations. The results show that the benefits of improved air pollution do not only include the direct benefits of increased health, but also include the potential benefits of reduced prevention costs. Ultimately, the results further indicate the importance of air pollution control.