Can Dirty Air in NYC Crash the Stock Market — and Your Portfolio?

Photo by Marco Rubino / Shutterstock.com

An uptick in air pollution levels in Manhattan isn’t just bad news for people breathing in the polluted air — it can also wreak havoc on the stock market.

According to researchers from the University of Ottawa and Columbia University, a one-standard-deviation increase in air pollution in Manhattan — where the New York Stock Exchange is based — reduces returns by a whopping 11.9 percent.

“The effects are substantial,” the researchers write in their study, which as recently published in the National Bureau of Economic Research.

The findings are based on the comparisons of 15 years of returns with the S&P 500 index and hourly measurements of fine particulate matter in lower Manhattan.

The researchers theorize that bad air has a direct impact on investors:

We hypothesize that pollution decreases the risk attitudes of investors via short-term changes in brain and/or physical health.

The new study produced similar findings to another recent study, which analyzed the relationship between mood effects and stock market returns in Turkey. According to that study:

We find that lag of air pollution in the three most populated cities of Turkey where the majority of investors live is negatively related to stock returns, even when other variables are controlled.

Knowing that stocks can take a hit when air pollution levels rise, “it might be time for investors to keep tabs on the Air Quality Index in addition to the other usual stock market indicators,” says MoneyWatch.

Are you surprised there was a connection found between stock returns and air pollution levels? Share your comments below or on our Facebook page.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

9 Houseplants That Remove Toxins From Your Indoor Air
9 Houseplants That Remove Toxins From Your Indoor Air

These plants may also do everything from reduce the amount of dust in your home to improve your productivity.

The 3 Biggest Regrets of Retirees — and How to Avoid Them
The 3 Biggest Regrets of Retirees — and How to Avoid Them

Rescuing a retirement from regret starts with these steps well before it’s time to quit working.

Believe It: You Can Save $500,000 in 15 Years
Believe It: You Can Save $500,000 in 15 Years

Even if you’re behind in preparing for retirement, there’s still a way to pull together a solid nest egg if you focus.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.