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Is there a connection between air pollution and stock market returns?

Eric Barker
April 17, 2011

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Health related research documents that air pollution has negative mood effects. Experimental works in psychology relate bad mood to increased risk aversion. Studies in financial economics report an observed link between mood effects and stock market returns. This study therefore investigates whether the mood effects caused by air pollution can have economic implications. It examines the relationship between air pollution and stock returns using data from the Air Quality Index, and stock returns from four stock exchanges in the US. We find that air pollution is negatively related to stock returns, even when controlling for other variables. The relationship becomes weaker as the distance of the stock exchange from the polluted area increases. The results also indicate that air pollution may even affect local traders investing in securities exchanges located far from the polluted area. The findings imply that a profitable trading strategy can be constructed.

Source: “Air pollution and stock returns in the US” from Journal of Economic Psychology

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TheRedArchive is an archive of Red Pill content, including various subreddits and blogs. This post has been archived from the blog bakadesuyo.

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Post Information
Title Is there a connection between air pollution and stock market returns?
Author Eric Barker
Date April 17, 2011 10:13 AM UTC (12 years ago)
Blog bakadesuyo
Archive Link https://theredarchive.com/blog/bakadesuyo/is-there-a-connection-between-air-pollution-and.15946
https://theredarchive.com/blog/15946
Original Link https://www.bakadesuyo.com/2011/04/is-there-a-connection-between-air-pollution-a/
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