Shubham Chaudhuri () (Columbia University - Department of Economics) Alexander S.P. Pfaff () (Columbia University - Department of Economics)
Abstract
The fuel-use decisions of households in developing economies, because they directly influence the level of indoor air quality that these households enjoy (with its attendant health effects), provide a natural arena for empirically assessing latent preferences towards the environment and how these evolve with increases in income. Such an assessment is critical for a better understanding of the likely effects of aggregate economic growth on the environment. Using household data from Pakistan we estimate Engel curves for traditional (dirty) and modern (clean) fuels. Our results provide empirical support for the household choice framework developed in Pfaff, Chaudhuri and Nye (2002a), which suggests that even if environmental quality is a normal good, non-monotonic environmental Engel curves can arise. Under plausible assumptions about the emissions implied by fuel use, our estimates yield an inverted-U relationship between indoor air pollution and income, mirroring the environmental Kuznets curves that have been documented using aggregate data. We then demonstrate, through a simple voting model, that this household-choice framework can generate aggregate EKCs even in a multi-agent setting with heterogeneous households and purely external environmental effects.
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Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number
0102-51.
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Stokey, Nancy L, 1998.
"Are There Limits to Growth?,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
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