Diesel Cars, Pollution, and Health

Car pollution provides a major threat to society, yet the economic and health trade-offs involving different fuel technologies are little understood. Diesel engines run more efficiently and produce fewer greenhouse gases than gasoline, but emit higher levels of particulate matter and nitrogen oxides. As the health impacts of diesel pollution remain unclear, regulators are left poorly informed. In the U.S. regulation is strict and only 3 percent of passenger cars run on diesel, while in the European Union diesel is encouraged through weaker emissions standards and tax preferences for diesel fuel, and the share of diesel cars is much higher. In this paper, we exploit the Volkswagen emissions cheating scandal to shed light on the impacts of diesel pollution on health outcomes in the U.S. Using county-year level variation in the fraction of registered vehicle involved in the emissions cheating scandal, we find that higher market penetration is associated with higher levels of particulate matter, as well as worse birth outcomes.