The Value of Information Disclosure: Evidence from Mask Consumption in China

Abstract

We study the effect of information provision on defensive expenditures, using China’s roll-out of air pollution information as a quasi-natural experiment. With a unique dataset of high-frequency mask purchase transactions, our difference-in-differences estimates show that the provision of air pollution information increases expenditures on PM$_{2.5}$ respirators by 32%, which is mainly driven by improved information quality and the addition of PM$_{2.5}$ index. The effect is enhanced by increased attention to pollution alerts and it is more pronounced during heavily polluted days. Our results shed light on the benefits of information provision through inducing defensive expenditures to reduce air pollution exposure.

Zhenxuan Wang

Ph.D. Candidate

My research interests lie at the intersection of environmental and energy economics, climate policy, development economics, and public economics.