This study assesses the health benefits of better air quality by examining the causal impact of China’s stringent “ \(2{+}26\) ” regional air pollution control policy on local air quality and population health. Employing a spatial regression discontinuity design that capitalizes on the policy’s location-specific features, we present compelling evidence that the \(2{+}26\) policy results in an average reduction of 12.2 units in the local Air Quality Index (AQI) and a 47.0% decrease in per capita medical expenditure from 2014 to 2018. A one-unit reduction in AQI corresponds to a 0.88% reduction in per capita annual medical spending, equivalent to RMB 30.2 (US$4.6). These health gains stem from reduced chronic disease prevalence and improved subjective well-being. Nationally, air quality improvement during 2014–2018 could save RMB 674 billion (US$104 billion) annually in national direct medical costs, constituting 11.6% of national medical expenditure in 2018. Our findings underscore the substantial health and welfare gains achievable through pollution controls in developing countries.
