Does Labeling Air Pollution Levels Matter? Evidence from Consumption of Respiratory Medicine in South Korea

In this paper, we analyze how a change in the labeling (guideline) regarding exposure to air pollution affects the consumption of respiratory medicine. In 2018, the Government of South Korea changed air pollution warning standards to a level that was more severe than it was in reality and as compared to earlier, thereby causing people to perceive a greater danger from air pollution than they previously did. Exploiting exogenous policy change and district-level spatial variation, we find that one additional day labeled “bad” after the new guideline is associated with an increase in consumption of medicine related to the respiratory system by 0.9% per person. A heterogeneous analysis reveals that 1) the impact is smaller in one day of consecutive days of bad air pollution than a single day of bad air pollution, 2) the impact is greater for pharmacy and primary care hospitals than tertiary health centers, and 3) the impact varies by type of medicine