Expectations and Adaptation to Environmental Threats

Scarce information and human capital may make it difficult to form accurate expectations, limiting responses to uncertain environmental threats like air pollution. We study two cross-randomized interventions in Lahore, Pakistan: 1) general training in forecasting; 2) provision of air pollution forecasts. Both reduced subjects’ own air pollution forecast errors; the training effect suggests that modest educational interventions can durably improve forecasting skills. Forecast receipt increased demand for protective masks and the responsiveness of outdoor time to pollution. Forecast recipients were willing to pay 41 percent of their total mobile phone costs for continued access, consistent with welfare gains from adaptation.