Air pollution, Risk Aversion and Decision Making

This study explores the link between air pollution and individuals' risk preferences and decision behaviors, utilizing NASA satellite data on global air pollution and the Indonesia Family Life Survey. We investigate how air pollution affects risk aversion and risky behaviors, including financial choices, employment sector selection, and life-changing decisions. Additionally, we differentiate between visible and invisible pollution exposure using volcanic and wildfire activities as instrumental variables. The preliminary result shows that higher Mass Concentration and Aerosol Optical Thickness (a major index that indicates level of pollution) of Dust and PM2.5 measured on the interview day leads to revelation of higher Low-Stake Risk Aversion by respondents.