Association for Public Policy Analysis & Management

Air pollution is a major environmental issue in China. In response to the health risks resulting from the degraded air quality, individuals exhibit various avoidance behaviors to reduce their outdoor exposures. In this paper, we examine the effect of air pollution levels on daily vehicle volume on expressways in Shanghai, China. Driving is a travel mode to avoid exposure to air pollution. Because of the reverse causality between air pollution and traffic, we adopt wind direction and thermal inversion as instrumental variables to deal with the endogeneity. We find that vehicle volume increases with air pollution. Results show that when air quality index increase by 1 point, vehicle volume increases by 9720 vehicles per day on workdays and 11200 vehicles per day on weekends. These results indicate that air pollution triggers a shift towards sheltered traveling that might result in even higher pollution and energy consumption. Our results provide conservative estimations on the change of travel modes due to air pollution, which calls for policy intervention in diminishing negative environmental impacts of such avoidance behavior.