CSB Working Paper, 2022, 2: Income and expenditure elasticity of household carbon footprints. Some methodological considerations

The income and expenditure elasticity of household carbon footprints (HCF) is a recurrent summary measure of the social stratification of greenhouse gas emissions. In top-downestimates, when microdata are lacking, it is also used to estimate the inequality in emissions between households across the income or expenditure distribution. In this article, we point to several key methodological considerations when computing the elasticity of HCFs, and demonstrate their practical and empirical implicat…

The income and expenditure elasticity of household carbon footprints (HCF) is a recurrent summary measure of the social stratification of greenhouse gas emissions. In top-downestimates, when microdata are lacking, it is also used to estimate the inequality in emissions between households across the income or expenditure distribution. In this article, we point to several key methodological considerations when computing the elasticity of HCFs, and demonstrate their practical and empirical implications by making use of Belgian survey data.
We find that the choice between income and expenditure as the main variable is most consequential for the estimated elasticity of HCFs, while the income elasticity of household emissions is more sensitive to a broader range of methodological choices. This has implications for top- own estimates of emissions along the income distribution, and related indicators of the inequality in household emissions by income groups.