People I (Mostly) Admire – Episode 171: Measuring Pollution on Parallel Earths

Date: November 22, 2025
Host: Steve Levitt
Guest: Michael Greenstone (University of Chicago economist)

Episode Overview

In this episode, host Steve Levitt dives deep with economist Michael Greenstone, an influential thinker in environmental and development economics, focusing on his groundbreaking work measuring the human impacts of air pollution, the real-world policy implications of his research, and the creative economic solutions he’s spearheaded globally. Their conversation ranges from the mechanics of pollution regulation to personal stories and the future of economics in public service.

Key Discussion Points & Insights

1. Understanding Particulate Air Pollution (TSPs, PM2.5, PM1)

• What Are Total Suspended Particulates (TSPs)?

  • Greenstone explains that TSPs are particles emitted mainly from fossil fuel combustion—especially coal and petroleum—which, if not captured, pollute the air. While science once considered all particulates equally bad, now it’s clear the smallest particles (PM2.5, PM1) are the most dangerous, as they penetrate deep into human bodies and cause grave health effects.
    • “The really small ones… can get deep into your body. The bigger ones get caught ... but the small, smaller ones just create havoc in the body.” (Greenstone, 02:45)

• Impact on Health:

  • These particulates are linked to premature mortality and a variety of illnesses; about half of the benefits from federal regulations in the U.S. come from particulate matter reduction. (03:45)

2. The "Parallel Earths" Thought Experiment

• Ideal Data vs. Real Data:

  • Levitt and Greenstone riff on the impossibility of conducting a lifetime randomized air pollution experiment in “two parallel Earths.” The next best thing? Natural experiments, where real-world quirks replicate the randomness needed to make causal claims.

• Natural Experiment in China – The Huai River Policy:

  • China once provided free coal for winter heating only to regions north of the Huai River, creating an arbitrary policy boundary. This led to vastly different pollution exposures between otherwise similar populations.
    • “If you live north of this line, bingo, you are getting free winter heating… If you live south ... you get no winter heating. In fact, it’s not allowed.” (Greenstone, 07:05)
  • Greenstone saw the opportunity to study the effects:
    • North of the river ≈ 140 micrograms/m³ of particulates vs. south ≈ 100 micrograms/m³. For context, WHO standard ≈ 10 micrograms/m³. (10:21)

• Results: A Shocking Loss in Life Expectancy

  • Originally found a five-year reduction in average lifespan for people north of the river; later studies showed the gap shrinking to about three years as pollution improved.

    • “You see a 40% increase in pollution just as you cross the river.… Difference in life expectancy was about three years.” (Greenstone, 11:26)

  • Levitt reflects: “Research usually gives tiny effects. This is the opposite.” (12:13)

3. Translating Research into Real-World Impact

• Air Quality Life Index (AQLI)
  • Greenstone created AQLI to make air pollution impacts tangible: how much life expectancy could increase if your area met specific air quality standards. It’s interactive, widely used, and “goes like wildfire in polluted places.” (18:42)
    • “The weather app [shows] air quality in terms that I have no idea what it means… But your AQLI really hits at it.” (Levitt, 20:03)
  • Critiques traditional Air Quality Index (AQI) for being uninformative about long-term health impact.

4. Building Markets for Pollution Reduction

• Cap-and-Trade Pilot in India: Surat

  • After working in the Obama administration on cap-and-trade, Greenstone helped India develop a pioneering emissions trading scheme in Surat.
  • Pilot involved 350 plants—half participated in the new pollution market, half were regulated conventionally.
    • Outcome: Emissions dropped by 20-30% in the market group and costs for firms also fell by 12%.
      • “It was better than we'd hoped.... 100% of the plants are in compliance… emissions had gone down by 20 to 30%...” (Greenstone, 28:24)
      • “It's exactly what economists say markets should do. So a real success.” (Levitt, 29:23)
  • Key Institutional Victory:
    • When large politically-connected firms violated rules, the regulator actually imposed penalties, cementing credibility.
      • “He imposed the fine, he deducted it from an account we'd set up… Every other period, people held the right number of permits. It was just amazing.” (Greenstone, 28:21)

• The Emissions Market Accelerator

  • Greenstone and colleagues aim to expand cap-and-trade systems, with a goal of reaching 1 billion people by 2030.
  • “There's a lot of progress and a lot of momentum. I just thought, this is what I want to do with my life—...making the world a better place.” (Greenstone, 31:16)

5. Reflections on Climate Change and Policy

• Improvement in Climate Outlook:

  • Levitt asks if he’s optimistic six years after their Amazon interview.
  • Greenstone: Technology (cheap renewables, fracking/natural gas) and changes in climate science have improved projections—now likely a 3°C rise instead of previously feared 5°C+. (32:50–34:10)

• Energy Policy and Global Equity:

  • Greenstone highlights the “cruelty of climate arithmetic”—arbitrary global warming targets can pressure poor countries to scale back energy use, deepening inequality.
    • “You're effectively telling them…you have to massively…cut your emissions ... and lead more impoverished lives. And I'm deeply uncomfortable with that.” (Greenstone, 38:16)

• On Real World Action vs. Academic Incentives:

  • Greenstone critiques incentives in academia for favoring publication over real-world policy impact—but feels compelled to bridge the gap.
    • “I don’t think people know this … I created this Air Quality Life Index, which meant to bring in a very tangible, hard to ignore way what the impacts of air pollution were on human health.” (Greenstone, 18:42)

6. On Communicating Economics and Personal Motivation

• Challenges in Academia and Public Policy Communication

  • Greenstone recounts how academia’s language left him “horrible, really terrible” at communicating to policymakers during his time in Washington, which catalyzed his efforts to focus on practical impact and clear communication. (51:56–52:57)
    • “I used all of our little cool language that we developed … The flip side of that was it was like giving everyone else the middle finger…”

• Personal Reflections: Family History & Career Purpose

  • Greenstone came from a family skeptical of economics; took inspiration from their ideals—blending rigorous inquiry with real-world good.
    • “Economics, strangely, came out of that blender. And in particular, using economics both to understand the world better and to try and make it a little bit better.” (Greenstone, 44:54)

• On Aging and Productivity

  • Levitt jokes that starting a podcast is a sign of being past one’s prime.
    • Greenstone: “It's an experiment. I hope it's not a sign that I'm on the way down. ... I wake up in the morning, I'm super excited to come to work.” (49:00–49:41)

Notable Quotes & Memorable Moments

On the scale of air pollution’s impact:

• “If around the world air pollution was reduced to WHO standards, the average person on the planet would gain about two years of life expectancy.”
  — Greenstone (13:37)

On incentives in climate policy:

• “I'm not that interested in stated preference. I want to know how much you're willing to pay. And to me, that's the ultimate metric of how much you care—not your virtue signaling… No. What are you going to do to make the world a better place?”
  — Greenstone (39:46)

On the magic of effective regulation:

• “It was better than we’d hoped....100% of the plants are in compliance…emissions had gone down by 20 to 30%... their compliance costs were down by about 12%.”
  — Greenstone (28:24, 29:23)

Segment Timestamps

• [02:45] What are TSPs and why they are dangerous
• [07:05] China’s Huai River natural experiment explained
• [10:21] Particulate levels: north vs. south, and WHO standards
• [11:26] Life expectancy reductions: 5-year and 3-year findings
• [18:42] The Air Quality Life Index (AQLI): bringing research to the people
• [21:52] The genesis of cap-and-trade in India
• [28:24] Cap-and-trade pilot results: emissions and compliance
• [31:16] Global expansion and aims of Emissions Market Accelerator
• [32:50] Is the global warming trajectory improving?
• [38:16] “Cruelty of climate arithmetic” – global equity and climate policy
• [44:54] Family history, motivation, and the Chicago tradition
• [49:00] Reflections on aging, productivity, and podcasting

Tone and Takeaways

The episode is simultaneously rigorous, deeply personal, and refreshingly frank. Greenstone is analytical but passionate about translating his academic work into tangible benefits for ordinary people. Levitt brings warmth and wit, poking fun at academia’s insularity but championing the possibilities of economics when applied creatively. Their conversation urges economists—and listeners—to pursue research that matters and to communicate it to the world.

Resources Mentioned

• Air Quality Life Index (AQLI)
• Greenstone’s Podcast: Shocked (Title: Shocked; Available on major platforms)

For those interested in the cutting edge of economics, public policy, and environmental innovation—with a healthy dose of humility and humor—this episode is both a master class and a call to action.