Income and expenditure elasticity of household carbon footprints. Some methodological considerations

The income and expenditure elasticity of household carbon footprints (CF) is a recurrent summary measure of the social stratification of greenhouse gas emissions. In top-down-estimates, 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 household CFs, 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 household CFs, while the income elasticity of household emissions is more sensitive to a broader range of methodological choices. This has implications for top-down estimates of emissions along the income distribution, and related indicators of the inequality in household emissions by income groups.

Automated summary

The income and expenditure elasticity of household carbon footprints are important indicators of the social stratification of greenhouse gas emissions. They are used to estimate the inequality in emissions between households across the income or expenditure distribution. This article discusses methodological considerations when computing the elasticity of household carbon footprints and demonstrates their practical and empirical implications using Belgian survey data. The choice between income and expenditure as the main variable has the most significant impact on estimated household carbon footprints, while the income elasticity of household emissions is affected by a broader range of methodological choices. This has implications for estimating emissions along the income distribution and measuring inequality in household emissions by income groups.