This paper presents a simultaneous equation, knowledge and perception-based averting behavior model of health risk caused by air pollution, with application to the Jinchuan mining area, China. Three types of averting behavior are distinguished: (a) purchases of purifying equipment, plants, or masks; (b) purchases of preventive or curing medication or food; and (c) adjustment of daily outdoor activities. Two types of perceived health risk are distinguished: (a) risk due to the intensity of exposure and (b) risk caused by the hazardousness of pollutants. The estimations show that an increase in perceived air pollution of two or more days a week leads to a restriction of outdoor activities of approximately 90 min per person per week. Another result is that the average annual household expenditure on air filters, foods, or medicines is 206.25 CNY (US$ 31.73) to prevent the hazardousness of air pollution. The total willingness to pay for air quality improvement is 2.95% of annual net household income. Because air quality improving investments can only be implemented in the medium or long run, daily disclosure of air quality is an adequate short-run policy handle to assist residents to take the right kind and level of risk-reducing actions.
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