Hold your breath: A new index of air pollution

Environmental quality and climate change have been discussed prominently as urgent problems that – due to air pollution – produce severe consequences affecting the everyday life of millions of people. Using a Multiple Indicators Multiple Causes (MIMIC) model, we calculate a new index of air pollution and provide a ranking for 122 countries for every fifth year between 1985 and 2005. The empirical analysis supports the Environmental Kuznets Curve (EKC) hypothesis and shows a significant influence of determinants such as energy efficiency, industrial production, the electricity produced from coal sources, and demographic transition on air pollution. According to the index, Norway, Switzerland, Japan, Luxembourg, and Iceland are among the top 5 countries in terms of air quality performance. Eritrea, Mozambique, Tajikistan, the Democratic Republic of Congo, and Ethiopia performed worst in 2005.