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The heterogeneous effects of climate policy on households: Evidence from 88 countries

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  • Missbach, Leonard
  • Steckel, Jan Christoph

Abstract

We analyze the distributional effects of climate policy by examining heterogeneity in households’ carbon intensity of consumption. We construct a novel dataset that includes information on the carbon intensity of 1.7 million individual households from 88 countries. First, we show that horizontal differences are generally larger than vertical differences. Then, we use supervised machine learning to analyze the non-linear contribution of household characteristics to the prediction of carbon intensity of consumption. Household income, proxied by total household expenditures, is usually an insufficient predictor for the additional costs of climate policy. Including household-level information beyond household income increases the accuracy of prediction. Our results highlight that, depending on the context, some compensation policies may be more effective in reducing overall heterogeneity than others.

Suggested Citation

  • Missbach, Leonard & Steckel, Jan Christoph, 2026. "The heterogeneous effects of climate policy on households: Evidence from 88 countries," Journal of Environmental Economics and Management, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:jeeman:v:139:y:2026:i:c:s0095069626001026
    DOI: 10.1016/j.jeem.2026.103382
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    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • D30 - Microeconomics - - Distribution - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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