Unbiasing the estimate of the role of income in carbon footprint of households: Analysis of the Spanish case as a pilot study

Abstract

Although the estimation of the elasticity of the household carbon footprint and income is a frequently analysed fact, unfortunately a fundamental aspect of this relationship has not been considered: it is not a constant factor for the whole population. To make an adequate estimate of this relationship, a Quantile Regression is proposed, obtaining significantly different results to those derived from the usual estimations using ordinary least squares (OLS), which have been carried out up to now. This fact is fundamental for the correct planning and evaluation of fiscal policies based on income taxation to reduce the carbon footprint. Our results confirm that the OLS estimation would overestimate the effects of income on CO2 reduction by 26%.