Growth, inequality, and the environment – evidence from the UK

Measuring fossil resource inequality – A case study for the UK between 1968 and 2000 (Eleni Papathanasopoulou and Tim Jackson, Ecological Economics, 2009, 1213-1225)

In this paper the authors examine inequalities in fossil fuel use among different income groups in the United Kingdom between 1968 and 2000. They find that fossil fuel use inequalities have risen faster than expenditure inequalities, and conclude that policy to reduce fossil fuel use needs to pay careful attention to distributional differences. Further, I would argue, with a little unpacking evidence such as this calls into question the dominant mainstream narratives around the unquestionable desirability a) of ‘growth’ and b) of  decreasing the progressivity of income tax regimes.

Papathanasopoulou and Jackson find that the Gini coefficient for total fossil fuel resource consumption in the UK grew by 24% between 1968 and 2000, while the Gini coefficient for overall household expenditure rose by only 13%. In other words, the rich got richer, and their fossil fuel use grew at an even faster rate than their riches. What that suggests to me is that in general, as people get more money to spend, they spend it in increasingly fossil-fuel intensive ways -every additional dollar (or Pound, in this case) causes proportionately more environmental damage! Surely that’s a prima facie case for a more progressive tax-system?

Hidden in this, furthermore, is yet another widening of inequality: namely, over this period, income inequality grew at a faster rate than expenditure inequality (we must examine expenditure to determine fossil resource impacts).  The paper cites a study (1)  showing that – starting from an index base of 100 in 1974, expenditure inequality in 2000 had risen approximately 110, while income inequality had passed 140. The difference is primarily explained by lower-income quintiles having increased their borrowing levels at a faster rate than higher income groups.

This pattern (of increasing inequality, expenditure cascades, and borrowing) is clearly not sustainable, even at the financial level, as the global financial crisis has demonstrated, and the shifting of financial losses (by owners of capital – of course mainly the rich) to the public at large (no matter how necessary to avoid a general collapse) will only compound the underlying inequality in future if the origin of ‘the debt’ is forgotten and the fiscal situation is portrayed as a result of unsustainable largesse to bureaucrats and the poor paid for by the (tax) flighty (bad pun intended) and burdened rich.

Papathanasopoulou and Jackson also look at how exactly different quintiles used fossil resources, breaking it down into direct and indirect uses (e.g. buying petrol = direct, plane trip  = indirect). To vastly over-simplify their analysis, the basic pattern is that the poor use relatively more fossil resources on heating their homes and taking the bus to the supermarket, while the rich spend more on air travel, restaurants, and big-screen tvs (2). This means there may be quite different implications of policies to reduce fossil fuel use for people in different income groups – a rise in fuel prices may mean, for the (rich-natons’) poor, shivering through a cold winter in an inadequately heated home, while for  more fortunate people it may require  a decision to shorten a winter holiday in the Bahamas.

Well worth a look if you can get hold of it. E-link for purchase/subscribers is here.

(1) Goodman A., Oldfield Z. 2004 Permanent Differences? Income and Expenditure Inequality in the 1990s and 2000s, The Institute for Fiscal Studies, Patersons, Tunbridge Wells. The results are similar in most Western nations. You can also find some similar results for the United States, for example, here.

(2) e.g.  Papathanasopoulou and Jackson cite a CAA study (1998) which shows 33% of UK air passengers were from the high income groups while only 10% were from the low-income groups.

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