Paper Number: 2013-04

Document Date: 08/2013

Author(s): Glenn Sheriff and Kelly Maguire

Subject Area(s): Indoor Air Quality; Benefit-Cost Analysis; Distributional Effects

JEL Classification:  Welfare Economics: Allocative Efficiency; Cost–Benefit Analysis; Equity; Justice; Inequality; and Other Normative Criteria and Measurement; Environmental Economics: Pollution Control Adoption and Costs; Distributional Effects; Employment Effects; Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

Keywords: environmental justice; distributional analysis; inequality indexes; lorenz curves; benefit-cost analysis

Abstract: This paper develops methods for evaluating distributional impacts of alternative environmental policies across demographic groups. The income inequality literature provides a natural methodological toolbox for comparing distributions of environmental outcomes. We show that the most commonly used inequality indexes, such as the Atkinson index, have theoretical properties that make them inappropriate for analyzing bads, like pollution, as opposed to goods, like income. We develop a transformation of the Atkinson index suitable for analyzing bad outcomes. We also show how the rarely used Kolm-Pollak index is particularly convenient for ranking distributions of both good and bad health and environmental outcomes. We demonstrate these methods in the context of emissions standards affecting indoor air quality.

This paper is part of the Environmental Economics Working Paper Series.

• Ranking Distributions of Environmental Outcomes Across Populations Groups (PDF)(49 pp, 1 MB, 08/2013)