Expectations and Adaptation to Environmental Threats

Abstract 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-randomised interventions in Lahore, Pakistan: (i) general training in forecasting and (ii) provision of air pollution forecasts. Both reduced the 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% of their total mobile phone costs for continued access, consistent with welfare gains from adaptation.