Measuring benefits from air pollution control: where do we stand? Measuring the benefits from reduced morbidity.

This paper presents a simple model of preventive health care, similar to that of Grossman (1972), and uses the model to define what a person would pay for a change in air quality. The model assumes that one can build up resistance to acute illnes by increasing his stock of health capital; however, health capital decays at a rate which depends on air pollution. For acute illness, willingness to pay as derived from the model is greater than the benefit estimate computed using the damage-function approach. To illustrate the size of this discrepancy, estimates of willingness to pay are computed using data from the Michigan Panel Study of Income Dynamics. The case for government providing information about risks rests secure in the theory of public goods. Informational scale economies and problems of dissemination conceivably call for a principal-agent relationship in which certain types of decisions are delegated to the agency. However, the setting of standards and prohibitions is too simplistic. It seldom recognizes that personal action tends to interact with and partially offset them. 8 references.