The Income Elasticity of Households' Green House Gas Emissions: The Case of Food

Abstract

Income is often viewed as a key driver of sustainable consumption. While descriptive studies suggest strong links between income and sustainability, the causal effect of income on the environmental impact of household consumption remains unclear. This study estimates the income elasticity of the environmental impact of household food purchases, focusing on grocery shopping. Using a panel dataset that combines (1) household-level scanner data on grocery purchases, (2) product category-level environmental impact estimates, and (3) administrative income data for the same households and periods, we report that a 1% increase in income leads to only a 0.02% rise in food-related greenhouse gas (GHG) emissions. We test whether this small effect masks opposing impacts on quantity versus composition of shopping baskets, but find only minor effects in both dimensions. Robustness checks confirm the consistency of our findings across subsamples and time horizons. Overall, income variation has limited influence on shifts toward lower-footprint food choices. These findings inform policies targeting environmental externalities in food consumption and strategies for income-based consumer targeting in the retail sector.

Keywords: income elasticity, environmental impact of food consumption, consumer purchase behavior, substitution effects