Does clean air increase the demand for the consumer city? Evidence from Beijing

Cities offer a large menu of possible employment and leisure opportunities. The gains from such consumer city leisure are likely to be lower on more polluted days. We study the association between daily consumption activity and outdoor air pollution in China and find evidence in favor of the hypothesis that clean air and leaving one's home for leisure trips are complements. Given the high levels of air pollution in cities in the developing world, regulation induced improvement in environmental quality is likely to further stimulate demand for the consumer city.