Economics Seminar（2019-16）

Topic: Can Technology Solve the Principal-Agent Problem? Evidence from Air Pollution Monitoring in China

Speaker: Guojun He, Hong Kong University of Science and Technology

Time: Tuesday,Oct. 15, 13:30-15:00

Location: Room 217, Guanghua Building 2

Abstract:

This paper examines the consequences of automation of air pollution monitoring as part of the Chinese central government’s “war on pollution”. Exploiting 654 regression discontinuity designs based on city-level variation in the exact day that monitoring was automated, we find that reported airborne particulate matter (i.e., PM10) concentrations increased by 41% just after the new monitors were operating. Additionally, a variety of other measures suggest that the quality of PM10 data greatly improved as its variability and correlation with satellite measures of PM10 increased. Further, the city-level measures of manipulation are positively correlated with the true PM10 concentration and corruption prevalence, and negatively correlated with per capita GDP. Overall, the evidence both illustrates the extent of the principal (i.e., central government) – agent (i.e., local officials) problem and that, at least with respect to pollution monitoring, technology can mitigate it by reducing the scope for hidden actions.

Introduction:

Guojun He is an economist working on environmental, development, and governance issues. Currently, he is an assistant professor appointed jointly at Division of Social Science, Division of Environment and Sustainability, and Department of Economics at the Hong Kong University of Science and Technology. He holds concurrent appointment at the University of Chicago's Energy Policy Institute (EPIC) and serves as the research director of its China center (EPIC-China). More details can be found on www.guojunhe.com.

Your participation is warmly welcomed!