Abstract

We estimate pollution's causal effect on fatal traffic accidents using instrumental variables. Using variation in fine particulate matter of 2.5 micrometers in diameter or less (PM2.5) because of air temperature inversions and eastward wind, we find that of PM2.5 positively affects fatal traffic accidents. Fatalities increase on average by 1.3% when PM2.5 increases by 1 u g/m3. This increase corresponds to 67 more yearly fatalities in California on average. The positive effects we estimate are consistent with mechanisms such as cognitive function due to pollution inhalation. Heterogeneity analysis finds that this mechanism is worsened for non-rural and for lower-income counties while it is mitigated by driver risk aversion during poor air quality days.