Despite the fact that the negative effects of ambient pollution on human health and well-being are a globally recognized problem, there has been little scientific evidence linking it with lowered cognitive performance and short-term decrease in human capital. This study (2014) documented this link using data of ambient pollution exposure and matriculation certificate test scores of Israeli students.

Fine particulate matter (PM_2.5) and carbon monoxide (CO) are considered to be two of the most dangerous forms of air pollution. Exposure to these pollutants inhibits proper blood flow, which among other effects could affect the oxygen flow to the brain and therefore affect cognition. Long-term exposure can lead to lesions in the white matter, which obviously is dangerous for cognitive skills. Impacts on the nervous system can lead to memory disturbance and fatigue, and impact productivity. The outdoor ambient pollution is also a risk indoors, as pollution travels easily i.e. through ventilation systems. Effects could be higher on sensitive or unhealthy groups of people.

Researchers collected data of a high school matriculation certificate exams, the Bagrut tests, for 489,419 subject examinations taken by 71,383 students at 712 schools throughout Israel in the years 2000–2002. Most of the test locations were near a station where the daily average pollution concentration levels could be measured precisely. Students presented a wide variety of ethnic heterogeneity, providing a context to examine the responsiveness of different groups and distinguish between different mechanisms by which pollution may affect cognitive performance.

The study found, that the levels of PM_2.5 and CO exhibited a robust negative relationship with test scores and receiving the matriculation certification. One standard deviation increase in the fraction of exam days that were heavily polluted were associated with a 2.19 and 2.70 percentage point decline in the probability of receiving a Bagrut matriculation certificate for PM_2.5 and CO respectively.

• Poor air quality on the day of the examination lowered test scores
  • Poor levels of PM_2.5 was associated with a 1.95 point decline: a 1 unit increase was associated with a 0.055 points decrease in the test score
  • Poor levels of CO was associated with a 10.16 point decline: a 1 unit increase in CO was associated with a 0.085 points decrease in the test score
• PM_2.5 had a larger impact on groups with higher rates of asthma, and CO had a homogenous effect across different demographic groups
• Both measures of pollution  were independent of each other

The results provide compelling evidence that cognition is affected by air pollution exposure, and lowers human capital. This may have several side-effects, such as assigning persons of lower human capital to higher rank than their more qualified peers. This may cause inefficient allocation of workers, and therefore less productive workforce across occupations in general. The significant impact on a particular student’s long-term academic outcome also has potential implications for their welfare, preventing some students from accessing higher education or qualifying on their desired college major. More generally, the consequence of air pollution leading to reduced cognitive performance may be relevant for a variety of everyday activities that require mental acuity. Traffic accidents, injuries in the workplace, and reduced worker productivity may all be the byproduct of reduced cognitive performance.