Expected Longevity and Demand for Clean Environment∗

This paper explores the role of expected longevity in determining the demand for clean environment in a framework where individuals face multiple mortality and morbidity risks. The presence of background mortality risk from the causes unrelated to pollution reduces the willingness to pay for environmental risks reduction, because the competing risk lowers the chance that the consumer will be alive to benefit from environmental quality improvements. Using data from the Health and Retirement Study, I find that individuals with shorter expected lifespan are more likely to reside near toxins-emitting facilities. Moreover, the effect of the longevity expectations is fairly profound as compared to other determinants of environmental risk exposure identified by the previous literature, such as level of education, race, and wealth. These findings imply that the expected longevity can be an important source of heterogeneity in environmental risks valuation