inequality and carbon emissions

A paper in Ecological Economics explores the links between inequality and carbon emissions.

The Trade-off Between Income Inequality and Carbon Dioxide Emissions

We investigate the theoretically ambiguous link between income inequality and per capita carbon dioxide emissions using a panel data set that is substantially larger (in both regional and temporal coverage) than those used in the existing literature. Using an arguably superior group fixed effects estimator, we find that the relationship between income inequality and per capita emissions depends on the level of income. We show that for low and middle-income economies, higher income inequality is associated with lower carbon emissions while in upper middle-income and high-income economies, higher income inequality increases per capita emissions. The result is robust to the inclusion of plausible transmission variables.

It could be that as developing countries develop, greener technologies become available to the working and middle classes faster than their household incomes actually increase. I am thinking of a switch from biomass and coal to electricity and natural gas, for example. These will lower people’s ecological footprint without necessarily costing them a lot more money. Once they start to get more money, they may start to transition to higher-impact behaviors, like driving instead of bicycling, and eating more meat and less grain.

You certainly wouldn’t want to promote income inequality as a policy measure to help the environment. There are social and tax policies that could be pursued instead, for example keeping communities walkable and mixed use even as incomes rise, and pricing meat at its true cost to the environment. These aren’t easy things to do politically in developing countries or anywhere else, of course, because they would require a political system willing to take on corporate power such as the oil, automobile, highway, and agriculture industries which tend to be immensely powerful and intertwined with political, bureaucratic and military elites.

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