Economics for Muggles: The Beijing Olympics and Air Pollution

A few economists find a unique natural experiment

Photo by __ drz __ on Unsplash

It’s hard to overstate the importance of the 2008 Olympics for the Chinese government. Throughout the middle half of the 20th century, China had a mixed reputation on the world stage. Decades of war, civil strife, famine, and purges by the Chinese Communist Party had led to economic stagnation and often retraction. Tens of millions died under The Great Leap Forward and Cultural Revolution. Then under Deng Xiaoping, the Chinese government committed itself to significant economic reforms in 1978. In the decades that followed, China grew by leaps and bounds. The country became “the world’s factory” producing goods that were shipped around the globe. In 2001, China finally joined the World Trade Organization (WTO), allowing it to integrate its economy more fully. In the 1990s, China also diversified its economy and began to produce far more than garments and low-tech goods. Its economy became one of the largest ten in the world.

To accompany all that economic success, China greatly wanted a symbolic event to announce its presence on the world stage. The Olympics seemed like the perfect option. A worldwide sporting event filled with pageantry and spectacle that would give Beijing the most international exposure since the massacre at Tiananmen Square in 1989. A Beijing Olympics would show the world that China was now a major player, a world power. They first bid for the 2000 Olympics, leading the first three rounds of voting before being eliminated in a stunning upset by Sydney, Australia. The 2008 field was competitive, with alternative bids coming from Toronto, Paris, Istanbul, and Osaka. It was Beijing’s time, however, and the city was selected after just two rounds of voting.

One of the largest concerns about choosing Beijing for an Olympic event, however, was the air pollution. The downside to being the world’s factory is that all that production has led to massive amounts of air pollution. China is by far the world’s largest consumer of coal, consuming more than the rest of the world combined. Many of those coal power plants and coal-powered factories are near Beijing. Air pollution readings were routinely some of the worst in the world, and that’s using official Chinese data. Beginning in 2008, the US Embassy in Beijing set up its own air monitoring station, and the numbers they recorded were consistently worse than those published by the Chinese Government. In one legendary tweet, the US embassy called pollution levels “Crazy Bad” (it was later updated to the much more bureaucratic “Beyond Index”) China, however, promised that they would sharply reduce the air pollution for games.

Sometimes it’s nice to have an authoritarian government that doesn’t have to account for regulatory rules, let alone those pesky voters. The Chinese government started instituting air pollution mitigation measures as early as November 2007, nine months before the opening ceremony. In the months leading up to the games, coal-fired power plants were upgraded, heavy-emissions vehicles were replaced, and entire factories were shut down. One steel company, Capital Steel, had to relocate entirely, and its production fell by two-thirds. Then, in the weeks leading up to the games, stricter measures were implemented. Additional power plants and factories were required to reduce emissions, even if they were already within acceptable bounds. All construction in Beijing was halted. Finally, cars were restricted from driving every other day. This caused vehicle exhaust to drop by more than 60 percent. These rules were strict but successful. Air pollution in Beijing dropped by 30 percent. During the games themselves, air quality stayed with national standards. Along with these changes in Beijing, other cities were subjected to similar standards, as pollution generated to the west of the capital drifts east.

This is a textbook case of a natural experiment. Normally, a pollution-related impetus, such as the Great Smog in London, is needed to produce such drastic results. This introduces cofounders to any experiment, as people may change their behavior. In this case, the impetus was an athletic event and had nothing to do with pollution itself. Additionally, air pollution is happily a one-way ratchet in most cases. If a city drastically reduces its air pollution, then it will usually stay at the new level or continue to drop. In this case, the drop was temporary, and pollution in the 2010s was often worse than it was in the 2000s. These circumstances mean that any differences in health outcomes can be plausibly attributed solely to changes in air pollution, not because of some other event. Three researchers, Guojun He, Maoyong Fan, and Maigeng Zhou, decided to dive into the data and see if there were any changes in human health because of these regulations. The results are published in a fantastic paper, titled “The effect of air pollution on mortality in China: Evidence from the 2008 Beijing Olympic Games”.

Their approach was relatively straightforward. First, they identified 34 cities where mortality data (the rate at which people die every year) could be linked with air pollution data. This set of 34 cities included 26 control cities and eight treatment cities. The eight treatment cities were those that were subject to the strict air pollution laws because the Olympics are all located near Beijing, while the 26 control cities are scattered throughout the rest of the country. When mortality rates are compared between the cities that were subject to the Olympic regulations and those that were not, there is a large difference. For every 10-unit decrease in particulate matter in the air, mortality decreases by 8.4 percent.

This is a big deal. A lot of times policy proposals geared at improving people’s health only moves the needle by a little bit. Maybe a couple of percent. After all, people die for a lot of reasons, many of which are not going to be associated with air pollution. To have mortality rates decline by eight percent shows how impactful air pollution can be. That’s one in every twelve deaths!

But were the results legitimate? Remember, the effects of air pollution are hard to isolate. As already mentioned, Beijing instituted massive changes during the Olympics. Maybe they increased the budget for public safety, which would increase citizens' health? Or maybe ambulances could reach houses faster in Beijing during the games because of the reduced traffic. Either of these would lower the mortality rate, meaning that the 8.4 percent cannot be attributed solely to air pollution. To address these issues, the researchers looked at other causes of mortality. They found that mortality rates only decreased when considering cardio-cerebrovascular and respiratory diseases, the diseases that are most impacted by poor air quality. Deaths from non-cardio-cerebrovascular and respiratory diseases, cancer, and injuries did not significantly decrease during the period when the Olympic regulations were in effect. If there was some other mechanism at play, we would expect all causes of mortality to decrease, not just those associated with air pollution.

What if some other aspect of the Olympics was at play? Perhaps people spent more time outside because they were going to and from sporting events. Maybe the rate of heart attacks changed because spectators got excited watching the events? Any of these would also confound results. To address this possibility, the researchers re-ran the data, but omitted July and August of 2008, or immediately before and during the Olympics and when the strictest measures were in effect. The results are similar, showing that the improvement in people’s health from the air pollution reprieve was long-lasting. By performing these various robustness checks, this paper goes a long way to prove the decreased air pollution from the Olympic restrictions did indeed improve citizens’ health.

Who was the most impacted? Unsurprisingly, the young and the elderly. Those less than five years old or older than 75 appear to be driving the results, although the authors do caution that the data on the young may not be accurate. It isn’t surprising that the old are so susceptible to poor air quality – this vulnerability would later be echoed in China and elsewhere during the Covid-19 pandemic. The researchers also looked at the mortality rates of males and females and found them to be similar.

Putting the results into human terms makes the results more important. If particulate matter was decreased by just 10 percent across all Chinese cities, the researchers calculated that 285,000 deaths would be avoided all year. If all cities in China could reduce the air pollution of all cities to normal levels, 2.28 million deaths per year would be avoided.

Now, these numbers come with some strong caveats. Beijing, being China’s largest city and capital, has different demographics and cultural norms than the rest of the country. The results may not apply to the rest of the country. Secondly, the exact relationship between air pollution and human health is still unknown, so extrapolating trends can be risky. Maybe the gains would decrease as air pollution went from bad to below average. If so, the mortality rates would not continue to fall as fast as air pollution. Finally, and perhaps most morbidly, it’s important to note that bad air pollution kills the weakest first. So while some people may have survived the summer of 2008 because of the Olympic restrictions, they may have died shortly after. Economists like to call this “harvesting”, a term that is a distasteful combination of euphemism and ghastliness. It’s not clear how many deaths were simply shifted slightly later (harvested) rather than put off for years (saved). Regardless, these researchers showed that air pollution does have a significant impact on human health.