Medical cost of environmental pollution: evidence from the Chinese Social Survey

Environmental pollution impairs residents' health, while the pursuit of health is highly correlated to medical costs. Understanding how environmental pollution affects medical costs is closely linked to the welfare of society. Based on theoretical analysis, this paper uses data from 5112 households of the Chinese Social Survey (CSS) in 2019, constructs a composite indicator to quantify environmental pollution using respondents' evaluations, and empirically investigates the causal effect of environmental pollution on household medical cost and the mechanism. The conclusions are shown as follows. First, environmental pollution can increase household medical costs, and this estimation result still holds after dealing with the endogeneity problem and other robustness tests. Second, there is heterogeneity in the impact of environmental pollution on household medical costs, households in the upper socioeconomic class, with heavy pension burdens or with strong health insurance coverage are more sensitive to environmental pollution and incur relatively higher household medical costs. Third, environmental pollution reduces residents' satisfaction with their spiritual life, which adversely affects their physical and mental health and can increase household medical costs. Residents' satisfaction with their spiritual life is an important mechanism for environmental pollution to affect household health care expenditures. Therefore, governments should enhance the enforcement of environmental protection and governance, strengthen the awareness of green issues and health education, and increase the supply of facilities for leisure and sports, thus reducing medical costs due to environmental pollution and easing the medical burden of residents.