The Effects of Wildfire and Distant Air Pollution on Household Financial Well-Being

Supersedes Working Paper 24-01 – Extreme Wildfires, Distant Air Pollution, and Household Financial Health

In this paper, we link granular wildfire burn, smoke plume, air pollution, and consumer credit data to estimate the impact of extreme wildfire and related dispersed air pollution effects on consumer financial health. We find material effects including increased credit card and personal loan delinquencies among households distant from the burn perimeter but exposed to high levels of pollution. Further analysis of confidential supervisory data reveals elevated spending and indebtedness among pollution-treated households, which corroborates and explains the delinquency findings. Finally, we present evidence of health spending and work disruption channels of smoke effects. Findings indicate that the adverse effects of extreme wildfires are salient to substantial dispersed populations, including those distant from the fire zone.