By Wen Huang
Photo by Leo Johnson

Michael has pushed the area of energy and environmental economics to new levels with his empirical innovativeness and rigor.”
—Prof. John List
Chair of Economics, on Prof. Michael Greenstone

Prof. Michael Greenstone is no stranger to the University of Chicago: A third-generation faculty member, Greenstone’s grandmother was a psychology professor, his father was chair of political science, and his mother received her bachelor’s, master’s, and PhD from the University. Those deep UChicago roots have influenced Greenstone’s career and steer his work today.

“While my grandmother and father were researchers, my mother became a social worker, and emphasized the importance of social justice. I think, at some level, my career has been an effort to combine those two things—trying to have a positive impact in the real world that is based on the most cutting-edge research,” says Greenstone, Lab’87, the Milton Friedman Professor in Economics, the College and the Harris School of Public Policy.

As a former White House economic advisor who helped shape the Obama administration’s energy and environmental policy, Greenstone witnessed a disconnect between policymakers and researchers. “Producing data and analysis is not enough,” he says.

Translating robust research into real-world impacts has become an organizing mission for Greenstone as director of the Energy Policy Institute at the University of Chicago, which focuses on confronting a wide range of energy and environmental challenges. It’s also part of the organizing mission behind the University of Chicago Urban Labs, for which Greenstone directs the energy and environment work. It’s also been a driving force behind his own research.

In 2014, Greenstone and colleagues from Harvard University and MIT partnered with the government in Gujarat, India, to reduce industrial pollution. The study found that making environmental auditors more independent improves the accuracy of audit reports; the reforms reduced pollution by 28 percent. Authorities in Gujarat later adopted the reforms as state law.

“That Gujarat project underscores the effectiveness of doing the research hand in hand with policymakers from the start,” says Hardik Shah, the member secretary of the Gujarat Pollution Control Board, who worked with Greenstone and his colleagues to implement the project. “Such an approach improves the chance of influencing policy down the line.”

The success in Gujarat prompted Greenstone to launch EPIC-India to collaborate with Indian policymakers in taking on energy and environmental challenges through cross-disciplinary, innovative research to make people’s lives better.

In India’s state of Bihar, home to 100 million people, per capita electricity consumption is just about 1 percent of U.S. per capita consumption. To expand energy access, Greenstone and his colleagues are working with the state-owned electricity distribution company to test whether a collective incentive can be used to increase payment rates, reduce distribution losses, and enable the utility to expand electricity supply.

“Michael has pushed the area of energy and environmental economics to new levels with his empirical innovativeness and rigor,” says John List, chairman and the Homer J. Livingston Distinguished Service Professor of Economics. “His work has lent important empirical insights to policymakers around the world, opened up new avenues of academic research, and tested important economic theories across the spectrum.”

Pollution and life expectancy

In 2002, Greenstone began analyzing the Clean Air Act and its impact on air quality and human health, as well as on industrial activity and home prices. He discovered that the health research ran into a major obstacle: “We just didn’t have a setting where we could see people’s lifetime exposure to air pollution.”

Then he learned of a government program in China, the Huai River policy, in which the government subsidized coal for heating for people living north of the Huai River and forbade winter heating south of it. The policy, which enabled northerners to have free winter heating, led to serious air pollution in the north.  

“The policy took effect in the period when people were really not allowed to migrate,” Greenstone says. “It means that northerners had been exposed to extraordinary air pollution concentrations their whole lives.”

Greenstone and his colleagues found that those living in the north saw their lifespans cut short by about five years compared to those in the south. He has applied the same metric from this study to India, finding that air pollution there is cutting lifespans short by three years for more than 650 million people.

“We can now say with much greater confidence that long-run exposure to air pollution, especially particulates, shortens lives,” Greenstone says. “I think our work has joined a larger effort to put a fine point on the consequences of these high levels of pollution and has helped crystallize people’s emerging concerns in China, with a similar process beginning to take hold in India.”

China has since widened its air-quality monitoring rules and declared a “war on pollution.”

The cost of climate change

Climate change is perhaps the greatest energy and environment problem. Greenstone is no stranger to work in this area, and among his research interests is quantifying the costs of climate change to society.

At the White House, Greenstone co-led the development of the U.S. government’s social cost of carbon—the monetary value of the damages from emitting one ton of carbon—used for regulations such as vehicle emissions and power plant standards. He is now co-leading a team of more than 20 economists, climate scientists, and computational experts to develop a global social cost of carbon, which can be fed into policy efforts to price and regulate carbon.

Additionally, they will produce a tool showing the impacts of climate change to specific sectors in regions throughout the world, helping to guide adaptation and risk-assessment decisions. As science advances, the new findings will be fed into the tool, leading to regular updating of the social cost of carbon and of the local impacts of climate change.

The project epitomizes Greenstone’s research goals: to answer the most critical energy and environmental questions in an interdisciplinary manner and to have real-world impact.

“From severe air pollution in China and India, to a lack of access to the energy needed to grow emerging economies, to the impacts from climate change that affect us all, the world is contending with energy and environmental challenges that threaten our lives and lifestyles,” Greenstone says.

“But for the first time in human history, we have the data and capabilities to find solutions to these challenges.”

Originally published on May 9, 2016.