The distribution of income is worse than you think: Including pollution impacts into measures of income inequality

• Published in: PloS one Vol. 13; no. 3; p. e0192461
• Main Authors: Muller, Nicholas Z, Matthews, Peter Hans, Wiltshire-Gordon, Virginia
• Format: Journal Article
• Language: English
• Published: United States Public Library of Science 21-03-2018; Public Library of Science (PLoS)
• Subjects: Adjustment; African Americans; Air pollution; Air pollution measurements; Atmospheric pollution; Biology and Life Sciences; Damage; Ecology and Environmental Sciences; Economic aspects; Engineering and Technology; Environmental aspects; Environmental health; Environmental impact; Environmental policy; Estimates; Ethnicity; Evaluation; Family income; Households; Hypotheses; Income; Income distribution; Income inequality; Industrial plant emissions; Inequality; Latin American cultural groups; Markets; Mortality; Ozone; Pay equity; People and places; Physical Sciences; Pollution; Research and Analysis Methods; Socioeconomics; Taxation; United States > US
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0192461

This paper calculates the distribution of an adjusted measure of income that deducts damages due to exposure to air pollution from reported market income in the United States from 2011 to 2014. The Gini coefficient for this measure of adjusted income is 0.682 in 2011, as compared to 0.482 for market income. By 2014, we estimate that the Gini for adjusted income fell to 0.646, while the market income Gini did not appreciably change. The inclusion of air pollution damage acts like a regressive tax: with air pollution, the bottom 20% of households lose roughly 10% of the share of income, while the top 20% of households gain 10%. We find that, unlike the case for market income, New England is not the most unequal division with respect to adjusted income. Further, the difference between adjusted income for white and Hispanics is smaller than expected. However, the gap in augmented income between whites and African-Americans is widening.