IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Is the Environment a Luxury? An Empirical Investigation using Revealed Preferences and Household Production

Listed author(s):
  • Chiara Martini


  • Silvia Tiezzi


This paper addresses the issue of whether environmental quality is a luxury good meaning that its demand increases more than proportionally with respect to income. We use demand analysis and household production to estimate the marginal willingness to pay for improvements in air quality in Italy and the income elasticity of WTP. Only market data on Italian households’ current consumption expenditures from January 1999 to December 2006 merged with a unique air quality index are used. We consistently find that the income elasticity of WTP for environmental quality is very close to one across income groups and WTP decreases as a percentage of income as income increases with interesting implications for environmental policy. Besides contributing to a strand of literature where there is very scant empirical evidence, this paper provides the first attempt at estimating WTP and its income elasticity using revealed preferences and household production.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 599.

in new window

Date of creation: Aug 2010
Handle: RePEc:usi:wpaper:599
Contact details of provider: Postal:
Piazza S.Francesco,7 - 53100 Siena

Phone: (39)(0577)232620
Fax: (39)(0577)232661
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:usi:wpaper:599. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabrizio Becatti)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.