Air Pollution Brings Down The Stock Market

“Every time air quality decreased by one standard deviation, we saw a 12% reduction in stock returns.”

Comparing daily data from the S&P 500 index with daily air-quality data from an EPA sensor close to Wall Street, Professor Anthony Heyes and his colleagues from the University of Ottawa found a connection between higher pollution and lower stock performance concluding that air pollution brings down the stock market.

Apparently being exposed to bad air can make you feel depressed which in turn can reduce your cognitive capability. Bad moods and lower cognitive capabilities tend to reduce the appetite for risk, associated with lower returns.

For the complete article, click here

Interview by Scott Berinato