A recent investigation from the University of Massachusetts Amherst has uncovered a striking disparity in carbon emissions linked to income levels, shedding light on the carbon footprint of affluent individuals. The research reveals that the top 10% of earners in the United States contribute to 40% of the nation’s greenhouse gas emissions, with substantial contributions originating from income derived from financial investments. The findings suggest a shift towards taxing investment income and shareholders, as opposed to consumption, to encourage environmentally conscious practices among the wealthy.
A novel study conducted at the University of Massachusetts Amherst has unveiled an unprecedented link between American household income and the emissions they generate, with investment activities playing a pivotal role in this emissions inequality.
Emerging research by the University of Massachusetts Amherst indicates that the wealthiest 10% of Americans are responsible for a staggering 40% of the entire country’s greenhouse gas emissions. The study, featured in the PLOS Climate journal, establishes a strong correlation between income, especially income derived from financial investments, and the emissions produced as a result of generating that income.
As a strategy to achieve the shared goal of capping global temperature increases at 1.5 degrees Celsius in a fair manner, experts advocate for the implementation of taxes targeting shareholders and the carbon intensity of investment-related incomes.
The relationship between consumption patterns—including dietary choices, transportation preferences, and purchasing behavior—and greenhouse gas emissions has long been recognized by scientists and environmental advocates. Traditional environmental policies have thus aimed to restrict consumption or direct it towards more eco-friendly alternatives, such as transitioning from meat-based diets to plant-based ones or replacing conventional vehicles with electric cars.
However, Jared Starr, a sustainability scientist at UMass Amherst and the lead author of the study, points out that “consumption-based approaches to limiting greenhouse gas emissions are regressive. They disproportionately penalize lower-income individuals while having limited impact on the extremely affluent, who tend to save and invest a significant portion of their earnings. Such approaches overlook a crucial aspect: carbon emissions contribute to income generation, but when this income is reinvested in stocks rather than spent on necessities, it avoids being subject to a consumption-based carbon tax.”
Starr raises a thought-provoking question: “What if we focus on how emissions generate income instead of how they facilitate consumption?”
However, answering this apparently simple question proves to be complex. While it’s relatively straightforward to capture data on wages and salaries—primary sources of income for 90% of Americans—obtaining insights into the investment income that constitutes a substantial portion of the wealthiest Americans’ wealth has been challenging.
To address this challenge, Starr and his colleagues examined three decades’ worth of data, utilizing a database containing more than 2.8 billion inter-sectoral financial transactions to trace the flow of carbon and income through these exchanges. This enabled them to calculate two distinct metrics: supplier-based and producer-based greenhouse gas emissions attributed to income.
Supplier-based emissions emanate from industries providing fossil fuels to the economy. For instance, fossil fuel companies have relatively low operational emissions, but they amass considerable profits by selling oil to entities that subsequently burn it.
In contrast, producer-based emissions are those directly emitted by a business’s operations, such as those from a coal-fired power plant.
Armed with these figures, Starr and his co-authors then connected their emissions data with another database containing detailed demographic and income information for more than five million Americans. This data segregates income sources, distinguishing between active income earned through employment and passive investment-generated income.
The team not only discovered that over 40% of U.S. emissions are traceable to the income streams of the top 10%, but they also revealed that the highest 1% of earners alone contribute to 15 – 17% of the nation’s emissions. In general, white, non-Hispanic households exhibited the highest income-associated emissions, while Black households displayed the lowest. Emissions tended to peak within the 45–54 age group before declining.
The researchers also identified “super emitters,” individuals with notably high emissions intensity. These individuals are predominantly concentrated within the top 0.1% of households, which are overrepresented in sectors like finance, real estate, insurance, manufacturing, mining, and quarrying.
Starr emphasizes the significance of this research, noting, “This study provides us with insight into how income and investments obscure emissions accountability. For instance, 15 days’ worth of income for a top 0.1% household generates the same carbon pollution as a lifetime of income for a bottom 10% household. A focus on income allows us to pinpoint who benefits the most from carbon emissions driving climate change and devise strategies to influence their behavior.”
In particular, Starr and his colleagues advocate for an approach centered on income and shareholder-based taxation, rather than taxing consumer goods.
Starr asserts, “This approach could effectively motivate the Americans who wield the most influence over and profit from climate change to transition their industries and investments to lower-carbon alternatives. This divestment is driven by self-interest, rather than altruism. Consider the pace at which corporate executives, board members, and major shareholders would shift towards decarbonization if their financial interests were aligned. The resulting tax revenue could substantially fuel the nation’s efforts toward decarbonization.”
Reference: “Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance” by Jared Starr, Craig Nicolson, Michael Ash, Ezra M. Markowitz, and Daniel Moran, 17 August 2023, PLOS Climate.
DOI: 10.1371/journal.pclm.0000190
Table of Contents
Frequently Asked Questions (FAQs) about Emissions Inequality
What does the study from the University of Massachusetts Amherst reveal about emissions inequality?
The study unveils a significant emissions disparity tied to income levels. It highlights that the top 10% earners in the U.S. contribute to 40% of the nation’s greenhouse gas emissions, largely due to income derived from financial investments.
How does the research propose addressing this emissions disparity?
The research suggests shifting the focus from consumption-based taxes to investment-oriented eco-friendly practices. Taxing income and shareholders, particularly of the wealthy, is recommended as a strategy to incentivize greener choices.
What is the main argument against consumption-based approaches?
Consumption-based approaches to limiting emissions are deemed regressive. They disproportionately affect lower-income individuals while sparing the wealthy who invest a considerable portion of their earnings. Such approaches neglect the emissions tied to income generation.
What is the significance of the connection between income and emissions?
The link between income and emissions challenges traditional views. The study shows that emissions generate income, particularly for the affluent. When this income is invested rather than spent, it escapes consumption-based carbon taxes.
How did the researchers analyze income and emissions data?
The researchers examined 30 years’ worth of data, utilizing databases of financial transfers and carbon flows. They calculated supplier-based and producer-based emissions and correlated these with demographic and income data for over five million Americans.
What is the recommended approach to combat emissions from high earners?
The study advocates for income and shareholder-based taxation, shifting the focus from taxing consumables. This strategy intends to leverage financial self-interest to accelerate decarbonization efforts in industries and investments.
Who are the “super emitters” identified in the study?
“Super emitters” are individuals with remarkably high emissions intensity. They are largely concentrated within the top 0.1% of households, prominent in fields like finance, real estate, manufacturing, and mining.
What potential impact could income-based taxation have on climate efforts?
Income-based taxation could encourage influential individuals profiting from climate change to transition their industries and investments toward lower-carbon alternatives. Tax revenue generated could significantly support national decarbonization initiatives.
More about Emissions Inequality
- University of Massachusetts Amherst Study
- PLOS Climate Journal
- Greenhouse Gas Emissions and Income Inequality
- Climate Policy and Taxation
- Eco-Friendly Investment Strategies
- Environmental Equity and Emissions
- Carbon Footprint Reduction Techniques
2 comments
peeps in power, you hearin’ this? income’s got its dirty secrets, let’s tax it green, make ’em invest in planet savin’!
this science stuff’s showin’ how unfair it is, the poor feel the heat while rich wallets stay cool, gotta switch up these carbon games, man.