Michael Greenstone

Michael Greenstone's research interests include environmental economics, energy economics, public finance, development economics, labour economics, and health economics.; in particular, he is a pioneer of the study of environmental issues in developing countries, an emerging field dubbed "envirodevonomics". According to IDEAS/RePEc, he currently (February 2018) belongs to the top 1% of highest ranked economists in terms of research publications.

Together with Olivier Deschênes, Michael Greenstone initially found that climate change will increase agricultural profits in the U.S. over 2010-2100 by an average of $1.3 billion per year (in 2002 U.S. dollars) and that the measurement of climate change effects on land prices (the hedonic approach) is extremely sensitive to seemingly minor choices about control variables, sample, and weighting. However, following Fisher et al.'s (2012) critique with regard to data coding errors and conceptual oversights in Deschênes and Greenstone (2007), Deschênes and Greenstone subsequently re-estimated climate change to decrease U.S. agricultural profits by $4.5 billion per year over 2010-2100. In another collaboration, Greenstone and Deschênes study the relationship between climate change and mortality and its mitigation through adaptation, and estimate that under "business-as-usual" scenarios climate change will increase the age-adjusted mortality rate in the U.S. by 3% by the end of the 21st century, though this effect may be strongly mitigated through populations adapting to the expected increase in the frequency of extreme temperature days.

Born in the United States, Michael Greenstone earned a B.A. in economics with High Honors from Swarthmore College in 1991, where he starred and lettered for the men’s basketball team, and a Ph.D in economics from Princeton University in 1998. Thereafter, he worked as a Robert Wood Johnson Scholar at the University of California, Berkeley (UCB, 1998-2000) before becoming an assistant professor of economics at the University of Chicago (2003–06). In 2006, Greenstone moved to MIT, first as associate professor (2003–06) and then as the 3M Professor of Environmental Economics (2006–14). During his tenure at MIT, Greenstone also held visiting appointments at UCB, the University of California Energy Institute, and Stanford University. Most recently, in 2014, he followed a call back to the University of Chicago, where he was made the Milton Friedman Professor in Economics and the College. At the University of Chicago, he further holds positions as director of the Becker Friedman Institute for Economics (BFI), director of the Energy Policy Institute at Chicago (EPIC), and faculty director of the Environment and Energy Lab at the University's Urban Labs. Additionally, Greenstone currently serves among else as co-chair of J-PAL's Environment and Energy sector (with Mushfiq Mobarak), director of the Energy Research Programme at the International Growth Centre (IGC), faculty director of the E2e Project, a fellow of the American Academy of Arts and Sciences and a non-resident senior fellow at the Brookings Institution. In the past, he has been e.g. a chief economist on the Council of Economic Advisors (2009–10) under the first Obama administration, a member of the advisory board to the Secretary of Energy under the Trump administration (2015–17), a co-director of IGC's Climate Change, Environment and Natural Resources Research programme (2010–13), and a director of the Hamilton Project (2010–13). Finally, in terms of professional service, Michael Greenstone sits on the board of editors of the Review of Environmental Economics and Policy and has been an editor of the Journal of Political Economy (2015–17), Review of Economics and Statistics (2007-10), and held positions on the boards of editors of the American Economic Journal: Economic Policy and the Journal of Economic Literature.

Exploiting the 1987 federal permission to U.S. states to only raise the speed limit on their rural interstates from 55 mph (ca. 90 kmh) to 65 mph (ca. 105 kmh), Greenstone and Orley Ashenfelter compare the time saved due to the increase in speed limit with the increase in fatality rates (an increase of ca. 35%) to estimate the value of a statistical life. They find that approximately 125,000 hours were saved per lost life, suggesting (if hours saved are valued at the average hourly wage) an upper bound of $1.54 million (in 1997 U.S. dollars) as a value of a statistical life.

How does air pollution affect economic outcomes? To investigate this question, Michael Greenstone and Kenneth Y. Chay use geographic variation in the reduction of air pollution due to the 1981-82 recession to estimate the impact of air pollution on infant mortality in the U.S.; they find that reducing TSPs by 1% results in a 0.35% decline in the county-level mortality rate of infants, with most of the reduction concerning newborn deaths, in particular among Afro Americans. In another study with Chay, Greenstone exploits the impact of the U.S. 1970 and 1977 amendments to the Clean Air Act, which set a federal ceiling for total suspended particulates (TSPs), empowered the newly created Environmental Protection Agency to designate "non-attainment" counties in excess of that ceiling, and to impose strict air quality regulations on polluters in such counties, on housing prices, to study the relationship between housing prices and air quality. They find that the legislation was effective in reducing TSP air pollution and, based on an elasticity of housing values with regard to TSP concentration ranging from -0.20 to -0.35, that the improvements in air quality between 1970 and 1980 attributable to the regulations imposed under the non-attainment designation caused an increase of housing values in non-attainment counties worth $45 billion. However, Greenstone also finds that the Clean Air Act's non-attainment designation probably played only a minor role in the 80% reduction of sulfur dioxide (SO2) concentrations in the United States, possibly because regulators assigned the SO2 non-attainment designation to many counties that hadn't even exceeded SO2 ceilings for a single day and consequently didn't impose excessively strict regulatory oversight. Finally, Greenstone also analysed the impact of the 1970 and 1977 Clean Air Act Amendments on industrial activity in the U.S. and found that pollution-intensive in "non-attainment" counties lost ca. 590,000 jobs, $37 billion in capital stock, and $75 billion (at 1987 U.S. dollars) of output over 1972-87 as a consequence of the greater regulatory oversight exercised by EPA.

Finally, Greenstone, Paul Oyer and Annette Vissing-Jorgensen use the extension of mandatory disclosure requirements under the 1964 Securities Acts Amendments from listed stock to over the counter (OTC) stock trades on stock returns. They find that the announcement of compliance with disclosure requirements by those OTC firms most likely to be affected by the change in regulation was accompanied by abnormal excess stock returns of ca. 3.5% in the weeks surrounding the announcement and that expectations regarding the extension of regulations resulted in abnormal excess returns ranging from 11.5 to 22.1% in the period between legislative proposal and enforcement, suggesting large-scale insider trading at OTC firms.