Step out on a winter weekday morning in Delhi, and you can almost feel the economy slowing with the traffic. Cars crawl, engines idle, and working hours disappear into the smog. But the cost runs deeper than time lost in a jam. Hospitals fill up during the smog season, pharmacies run out of inhalers, and schools shut for what some now call “air holidays”. Research shows that toxic air could be costing Delhi over Rs 9,000 crore every year. Delhi’s air crisis, thus, is not just about public health, it is also an economic one.

The University of Chicago’s Air Quality Life Index shows that long-term exposure to fine particulate matter costs residents of Delhi over eight years of life expectancy. In our fieldwork with over 3,000 households in Delhi a few years ago, we also found something more troubling: even when people know the air is bad, few are willing or able to pay for cleaner air.

That is a classic market failure. We demand clean water and reliable electricity, and the market responds with bottled water and privatised electricity supply. But, when it comes to clean air, our collective demand does not elicit the same supply response. The absence of a market response is a price that shows up in medical bills, lower productivity, and slower growth.

The socio-economic cost, in fact, unfolds in layers. At the household level, health costs are among the first to rise. Studies from Delhi have shown that families often rely heavily on out-of-pocket spending for healthcare, leaving them financially exposed when illness strikes. Separate research also finds that access to formal health-insurance coverage remains limited.

Hospitals have reported tens of thousands of respiratory cases in 2024 alone, with air pollution cited as a key trigger. For low-income families, even a short hospital stay can erase a lifetime of savings, while lost workdays and reduced productivity eat into incomes.

And then there is the cost of lost time manifesting itself in lower productivity resulting from a sub-optimal utilisation of the scarce national resources. The average Delhi commuter spends long hours every week stuck in traffic. A study a few years ago showed that congestion costs the city tens of thousands of crores of rupees annually in lost fuel, health, and labour productivity.

Children bear the longest shadow. Research from India and abroad consistently links exposure to fine particulate pollution with lower test scores, weaker memory, and higher absenteeism. In Delhi, where schools get closed when the air turns hazardous, the effect is visible.