Protecting the environment for a brilliant future: prospects of upward mobility and environmental willingness to pay in China

This paper examines how the prospects of upward mobility (POUM) affects the willingness to pay (WTP) for environmental protection. The POUM may increase environmental WTP through an income effect and an elevated preference for environmental protection. On the other hand, environmental protection serves the role of redistribution as the rich pay more for it through progressive taxes and benefit less because they have more means to avoid harm from pollution. The POUM could thus decrease the WTP for environmental protection as it reduces the preference for redistribution. Using a nationally representative dataset, we find that positive POUM leads to higher environmental WTP, controlling for the current income level and other important determinants. We also find evidence consistent with environmental protection as a redistribution policy hypothesis: the POUM increases environmental WTP more among those with higher redistribution tendencies because the POUM would not reduce environmental WTP as redistribution as much.