When Externalities Collide: Influenza and Pollution

Influenza and air pollution each pose significant health risks with global economic consequences. Their shared etiological pathways present a case of compounding health risk via interacting externalities. Using instrumental variables based on changing wind direction, we show that increased levels of contemporaneous pollution increase influenza hospitalizations. We exploit random variation in effectiveness of the influenza vaccine as an additional instrument to show that vaccine protection neutralizes this relationship. Thus, pollution control and vaccination campaigns jointly provide greater returns than those implied by addressing either in isolation. We show the importance of this consideration in addressing observed gaps in influenza incidence by race. (JEL D62, I12, J15, Q51, Q53)