Explaining the Willingness to Pay for

Environmental Protection
rough draft – please do not cite without permission
Michael Dorsch∗

January 28, 2011

Abstract

This paper empirically investigates individuals’ willingness to pay for stronger en-
vironmental protection, analyzing nearly 42,000 survey responses across 41 coun-
tries from the 2005-2008 wave of the World Values Survey. Several interesting re-
sults emerge from the analysis: (i) within countries, there is support for the notion
that environmental protection is a normal good, but not across countries, (ii) self-
identification as a “world citizen” is the strongest determinant of demand for greater
environmental protection, (iii) there seems to be diminishing marginal utility from
environmental protection, such that respondents from countries with high EPI scores
were less likely to demand further environmental protection, (iv) democratic devel-
opment increases the demand for environmental protection, and (v) the determin-
ing factors of the demand for environmental protection are significantly different in
magnitude depending on the level of economic and institutional development.

Keywords: Environmental protection policy, Political preferences, Global public goods,

World Values Survey

∗
Department of Economics, The American University of Paris. Email:

1
1 Introduction
Introduce the idea, within the context of political economy
National environmental policies, as any other policy, emerge from political processes
that must take into account the policy preferences of citizens within the nation. In well-
functioning democracies, it is believed that policy preferences are aggregated in such a
way that the policy that gets implemented approximates the median preference within
the society. Even in autocratic societies, citizens’ policy preferences constrain the policy
direction of the leadership, in the sense that (sometimes violent) political transitions may
occur if the leadership sets policy that is radically different from the plurality preference.
Regardless of the political institution, preferences for environmental protection are sim-
ilar to preferences for traditional public goods: the benefits of environmental protection
are non-excludable and non-rival and the costs are generally foregone private market
consumption. When citizens determine their preferences for environmental protection,
their relative income in society is likely to be an important cost-side factor (either due to
greater taxation or proportional adjustments in consumption patterns). This paper aims
to explain the extent to which relative income can account for differences in individu-
als’ “willingness-to-pay” for greater environmental protection, and aims to identify other
determining factors of willingness to pay.

The data sources and the pooled sample

I consider individual-level survey responses from the 2005-2008 wave of the World
Values Survey (WVS) [World Values Survey Association (2009)]. The question of paramount
interest, which approximates the respondents’ “willingness-to-pay” for greater environ-
mental protection, was asked in 41 countries to nearly 42,000 respondents. The WVS
questions also provide information on the respondents’ relative incomes, education lev-
els, ages, attitudes about global warming, and attitudes about levels of citizenship. In
addition, I have gathered various country-level characteristics from the myriad of data
sources compiled in the Quality of Government database [Teorell et al. (2010)], includ-
ing the Environmental Performance Index score [Etsy, D. et al. (2008)], national income
per capita [United Nations Statistics Division, Economics Statistics Branch (2009)], and
the widely-used pol i t y score of democratic development [Marshall and Jaggers (2002)].
The resulting sample pools WVS responses across countries and includes the aforemen-
tioned country-level characteristics.

2
Overview of empirical methodology
The dependent variables in the regression analysis are converted into binary vari-
ables, so probit estimations are employed. The empirical analysis includes regressions
on the full sample, as well as sub-sample regressions on the OECD-member countries
and the non-OECD countries. The analysis reveals interesting differences between the
OECD and non-OECD countries as to the determinants of preferences for environmental
protection.1 Furthermore, I have preformed within-country estimations for each of the
41 countries and analyze how the factors that determine willingness to pay for environ-
mental protection differ in their magnitude depending on the level of development.

2 Data description

2.1 Dependent variables

The dependent variables describe individuals’ “willingness to pay” for additional environ-
mental protection in their country. The variables are taken from the 2005-2008 wave of
the World Values Survey. In 41 countries, respondents were asked if they agree with the
following statement: “I would give part of my income if I were certain that the money
would be used to prevent environmental pollution.” The responses were used to create
a binary dependent variable, w t pinc = 1 if the respondent strongly agreed or agreed
and w t pinc = 0 if the respondent disagreed or strongly disagreed with the statement.
Similarly, respondents were asked if they would support higher tax rates to finance envi-
ronmental protection. Respondents were asked if the agree with the following statement:
“I would be willing to pay higher taxes if I were certain that the money would be used
to prevent environmental pollution.” The second binary dependent variable is similarly
constructed, w t pt ax = 1 if the respondent strongly agreed or agreed and w t pt ax = 0 if
the respondent disagreed or strongly disagreed with the statement. The questions seem
to get at marginal willingness to pay, since there is already some level of environmental
protection present, in all countries. The empirical results confirm that respondents are
thinking in marginal terms, as the proportion of respondents answering “yes” is lower in
the richer countries, after controlling for demographic and socio-economic respondent
characteristics. This supports the notion that environmental quality is a normal good
1
Robustness checks include running the regressions using linear probability models, running ordered
probit estimations on the raw, ordinal data, and re-running the probit estimations with alternative binary
dependent variables, constructed using different cut-off points for the binary dependent variables.

3
with diminishing marginal utility.

2.2 Independent variables

2.2.1 Individual-level explanatory variables

All individual-level explanatory variables are taken from the 2005-2008 wave of the
World Values Survey. The individual=level variables include relative income, four at-
titudinal variables, two education variables, the respondent’s age, and the respondent’s
political ideology (where available).2
The exercise begins by looking at willingness to pay and a(n imperfect) measure of
relative personal income within a country. The survey question in WVS asks respondents
for their perceived income decile, which is reported as 1-10 in the variable incdec.3 All
regressions were ran with non-linear income decile effects, but no significant non-linear
effects were found. Ex ante, higher income deciles should, on average, be more willing
to pay for environmental protection.4
The attitudinal variables are all binary. First, globalwar m = 1 if the respondent
felt that global warming was a “serious” or “very serious” problem. Second, there are
two citizenship questions: wor l dci t = 1 if the respondent agreed or strongly agreed that
they see themselves as a world citizen and nat ionci t = if the respondent strongly agreed
that they see themselves as a citizen of their nation. The final attitudinal question asks
respondents if it is justifiable to avoid fare on public transport on a scale from 1 to 10,
where 1 is “never justifiable” and 10 is “always justifiable”. Respondents who answered
less than 5 to this question are coded as never f r ee = 1.
To control for education, I consider whether or not the respondent completed high
school (hs = 1 if they finished high school) and whether or not the respondent gets
information about the world from books (books = 1 if the respondent used a book to
learn about the world in the week prior to the interview). I also control for the respon-
dent’s age in years (ag e) and whether or not they consider themselves politically liberal
2
Several authors have found a significant difference between the sexes, such as Israel and Levinson
(2004) and others. Also, urban residence seems to be in a lot of studies, e.g., Marquart-Pyatt (2008). I
may need these variables too.
3
There appears to be a systematic under-reporting of income decile (cumulatively, most countries have
less than 10% reporting to be in the top two deciles of the income distribution).
4
A result derived in a theoretical companion paper [Dorsch (2011)] is that most-preferred levels of
environmental protection are increasing in individual income levels due to the diminishing marginal utility
of consumption and the constant marginal utility of emissions reduction.

4
(l i ber al = 1 if, on a scale from 1 (left) to 10 (right), they consider themselves between
1 and 4).5

2.2.2 Country-level explanatory variables

At the country level, I control for per capita income, the level of environmental protec-
tion, and the level of democratic development. Per capita GDP from 2002 is expressed
in terms of PPP-adjusted 1990 US dollars, taken from the United Nations. l gd pc is the
natural logarithm of the UN per capita GDP data. The Environmental Protection Index
(epi) measures “how well countries succeed in reducing environmental stress on human
health and promoting ecosystem vitality and sound natural resource management.” The
index ranges between 0 and 100 and is increasing in environmental performance. All
of the regressions were run with non-linear epi terms, which are reported in any cases
where epi was found to have significant non-linear effects. Finally, poli t y is the “revised
combined polity score,” a measure of democratic development, which ranges between
−10 (strongly autocratic) and 10 (strongly democratic).

3 Empirical analysis

3.1 Preliminaries
As motivation for the more detailed statistical analysis to follow, consider Figure 1, which
shows the fraction of respondents who agreed they would pay part of their income
for greater environmental protection (w t pinc = 1), by income decile, in Germany, the
United States, China and India. Two notions emerge from the Figure 1: (i) willingness
to pay for further environmental protection does appear to increase with income in all
four countries (the effect is clearly monotonic in Germany, less so for the others) and (ii)
on average, higher willingness to pay for further environmental protection in China and
India compared to Germany and the United States. The first notion is as expected. The
second notion, however, deserves further attention, as it contradicts well-known theories
which predict that the desire to protect the environment strengthens along the develop-
ment path.6
5
Non-OECD countries were far less likely to ask this question, so it was only used as a control variable
for the OECD countries.
6
In the environmental economics literature, environmental protection has been modeled as a normal
good, the demand for which increases with income level [Baumol and Oates (1979)]. In the environmental

5
Figure 1: Proportion of individuals willing to pay part of their income for further envi-
ronmental protection, by income decile, in Germany (top left), the United States (top
right), China (bottom left) and India (bottom right).

Indeed, it seems that the survey question is getting at individuals’ marginal willing-
ness to pay for further environmental protection (MWTP). Individuals in some advanced
economies, such as Germany, may feel that their country has achieved a satisfactory level
of environmental protection and they are not willing to pay for marginal improvements.
In other words, the marginal utility from environmental protection may be diminish-
ing, which would mean that willingness to pay for additional environmental protection
should be lower for countries that have already achieved a high level of environmental
quality. As such, it will be important to control for country-level fixed effects, such as the
achieved level of environmental protection in the respondents’ home countries. Table 1
presents the proportion of respondents willing to pay for further environmental protec-
tion by country, where the countries are sorted in ascending order according to per capita
sociology literature, the post-materialism hypotheses describes how individuals in affluent societies are
more free to pursue post-materialistic goals (including environmental protection) as they become less pre-
occupied with the economic struggle to survive [Ingelhart (1995) and Ingelhart (1997)].

6
GDP. The last column of Table 1 presents the Environmental Protection Index score.

3.2 Pooled sample regression analysis

I run probit specifications on the pooled sample of individual responses with country
fixed effects for 41 countries to explain the variation in the willingness to pay binary
variables controlling for the individual and country-level variables described above. The
baseline specification that I consider is the following:

� �
prob(W T Pi j = 1|Xi , Xj ) = Φ α� Xi + β � Xj + ui j , (1)

where W T Pi j ∈ {0, 1} are the binary responses variable of individual i from country j, Φ
represents the standard normal cumulative density function, Xi is a vector of individual-
level explanatory variables, Xj is a vector of country-level explanatory variables, and α
and β are vectors of coefficients to be estimated using probit. The regression output in
Tables 2 and 3 report the average marginal effects for each variable. Table 2 contains the
estimated marginal effects on the probability that respondents were willing to pay part
of their income for further environmental protection and Table 3 is the analogue for the
willingness to pay higher taxes. Both tables report the estimates for the full sample of
41 countries in the first column, only OECD member countries in the second column and
only non-OECD countries in the third column, As measures of fit, the last two rows of
each table report the pseudo−R2 and the percentage of within-sample predictions that
the specifications get correct. Generally speaking, the ability to predict more than half of
the binary outcomes correctly is seen as support for the specification. As the regression
output tables indicate, 68% of responses to the WTPinc question were correctly predicted
and 62% of the WTPtax responses were correctly predicted, which gives support to the
specifications, despite the relatively low pseudo−R2 statistics. As a robustness check, I
also estimated linear probability models, which are presented in Tables 4 and 5.

3.2.1 Full pooled sample results

For both the income and tax questions, there are several individual-level variables that
are highly significant covariates with W T P. Individuals that believe that global warming
is a serious problem are more likely to be willing to pay for environmental protection,
as are those that view themselves as world citizens. Identification as a national citizen
had a significantly positive impact on the probability that W T P inc = 1, but it was in-

7
significant in the W T P t ax regression. Of the attitudinal variables, viewing oneself as
a world citizen had the largest marginal impact on the probability that the respondent
was willing to pay for further environmental protection. For example, respondents who
identified themselves as a world citizen were about 15 percentage points more likely
to respond that they were willing to pay for further environmental protection (for each
question). As expected, education has a significantly positive impact on willingness to
pay for environmental protection. Finally, those with higher incomes (relative to their
countrymen) were more likely to agree to making economic sacrifice to protect the en-
vironment, with the probability an individual had W T P = 1 increasing 1.5% points for
each income decile. Non-linear income decile terms were included in previous specifi-
cations that I ran, but found to be insignificant, so are not included in the specifications
presented in Tables 2–5.
As for the country-level variables, individuals from countries with higher EPI scores
were less willing to pay for further environmental protection, though the negative ef-
fect was diminishing. This result supports the notion that there is diminishing marginal
utility from environmental protection (or, that the demand for environmental protection
may become saturated). For both W T P questions, respondents from more democratic
countries were more likely to be willing to pay for further environmental protection, in-
dicating that perhaps contributions to public goods were viewed as a waste of money in
more autocratic regimes. Surprisingly, respondents from higher income countries were
no more likely to be willing to pay for further environmental protection, which poses a
serious challenge to theories of post-materialism. Tables 4 and 5 demonstrate the esti-
mated marginal effects are highly robust to estimation with the linear probability model
rather than probit.

3.2.2 Differences between OECD and non-OECD pooled sample results

Tables 2–5 also provide sub-sample estimations, breaking the pooled sample into OECD
and non-OECD pooled sub-samples.7 For both the income and the tax question, many
of the estimated marginal effects are similar between the pooled sub-samples (incdec,
wor ld ci t, never f r ee, and l g d pc). There are some interesting differences, however.
First, the impact of believing that global warming is a serious problem is much
stronger (8% points for the income question and nearly 10% points for the tax ques-
7
Note that there are far more observations from non-OECD countries (24,345 from non-OECD countries
and 15,470 from OECD countries). This alone seems to make the paper a contribution as many of the
papers I have reviewed only consider the developed world.

8
tion). As global warming is more of a global public bad, it seems that being motivated to
alleviate it would represent more of a “post-materialist” intention. Following the “objec-
tive problems and subjective values” hypothesis of Ingelhart (1995), this difference can
be rationalized by noting that the developing world is likely to be motivated by more
local environmental problems than the developed world.
A second difference between the sub-sample estimates is less easily rationalized. For
the income question, identification as a national citizen is significantly positive for the
non-OECD respondents, but insignificant for OECD respondents. For the tax question,
the opposite is true. This may indicate that in the OECD, respondents may balk at the
income question because they are weary of the free-rider problem among less nationally-
minded citizens, whereas in the non-OECD countries, nationalist respondents are more
weary about the efficacy of a government program to solve tough problems.8
As for education, in the OECD countries the effects of formal education (hs) and
informal education (books) have significantly positive effects on willingness to pay for
environmental protection of roughly the same magnitude. In the non-=OECD countries,
however, informal education has a strong significantly positive effect on willingness to
pay, whereas formal education has no effect.
There are also interesting differences between the sub-samples in regards to the
country-level variables. For one, willingness to pay for environmental protection is higher
in countries where the government is already doing a better job protecting the environ-
ment. In the non-OECD sub-sample, the epi score has no effect on willingness to pay,
however. This result is difficult to explain, as it seems to contradict the notion that there
is diminishing marginal utility to environmental protection. Finally, quality of democratic
institutions is shown to reduce willingness to pay in the OECD countries and increase it
in the non-OECD countries. All of the similarities and differences between the OECD and
non-OECD sub-samples are robust to estimation with the linear probability model rather
than probit.

3.3 Comparison of within-country estimates

In addition to the pooled sample results, I have also preformed within-country probit
estimations for each of the 41 countries in which the willingness to pay part of income
for environmental protection question was asked in the 2005-2008 wave. The benefit
8
Indeed, the relevant government agency may not even exist in many non-OECD countries and nation-
alist respondents may have better information about the capacity of their national government.

9
Figure 2: Estimated marginal effects of believing global warming is serious problem on
willingness to pay for greater environmental protection and country characteristics. The
estimates are plotted against log of per capita GDP (top left), Environmental Performance
Index (top right), Polity score (bottom left), and Economist Intelligence Unit’s Function-
ing of Government score (bottom right).

Notes: Log of per capita GDP linear fit has R2 = 0.259. EPI score linear fit has R2 = 0.171. Polity score
linear fit has R2 = 0.190. EIU functioning of government score linear fit has R2 = 0.146.

of such an exercise is that we can learn more details as to the differential impacts on
willingness to pay of relative income, perception of the global warming problem, and
attitudes about world citizenship.
The within-country estimates of the marginal effect of believing that global warming
is a serious problem are presented in the first column of results in Table 6. As indicated
in the table, the sign on the estimated marginal effect is positive in 40/41 countries (sig-
nificantly positive in 35/41 countries). The magnitude of the effect varies, however, and
is shown to depend positively on the level of development. Figure 2 plots these estimates
against several country characteristics: (i) log of per capita GDP, (ii) EPI score, (iii) Polity
score, and (iv) EIU Functioning of Government score. The marginal effect of believing

10
Figure 3: Estimated marginal effects of self-identification as a world citizen on willing-
ness to pay for greater environmental protection and country characteristics. The esti-
mates are plotted against log of per capita GDP (top left), Environmental Performance
Index (top right), Polity score (bottom left), and Economist Intelligence Unit’s Function-
ing of Government score (bottom right).

Notes: Log of per capita GDP linear fit has R2 = 0.068. EPI score linear fit has R2 = 0.022. Polity score
linear fit has R2 = 0.050. EIU functioning of government score linear fit has R2 = 0.025.

that global warming is a serious problem is greater for higher levels of development, for
any of the four proxies for development.
The within-country estimates of the marginal effect of self-identification as a world
citizen are presented in the third column of results in Table 6. The table indicates that the
sign on the estimated marginal effect is positive in 38/41 countries (significantly positive
in 33/41 countries). The magnitude of the effect, again, is shown to depend positively on
the level of development. Figure 3 plots the estimates against the same battery of country
characteristics as in Figure 2. Again, the estimated marginal effect of self-identification
as a world citizen is of a greater magnitude in countries where the four development
indicators are higher.

11
Figure 4: National Income and the Within-Country Effect of Higher Income. Per Capita
GDP on the left and Natural Log of Per Capita GDP on the right.

Notes: Linear fit on Per Capita has R2 = 0.003. Linear fit on Log of Per Capita has R2 = 0.005.

The within-country estimates of the marginal effect of higher relative income are pre-
sented in the second column of results in Table 6. The table indicates that the sign on the
estimated marginal effect is positive in 38/41 countries (significantly positive in 24/41
countries). In contrast to the two previous series of estimated coefficients, however, the
relative income estimates do not vary systematically with any of the development indi-
cators. Figure 4 plots the estimates against per capita GDP and the log of per capita
GDP. There is essentially no relation. There is no relation with the other development
indicators either, so the plots are omitted.9
In the last column of Table 6, I calculate the predicted probability that an individual
in the median income decile is willing to pay part of his income for greater environmental
protection. As the table indicates, the predicted probability is greater than 0.5 in 37/41
countries (significantly greater than 0.5 in 33/41).10 Figure 5 plots the predicted proba-
bilities against the same battery of development indicators and finds a negative relation
between the predicted probabilities and all four development indicators.11
9
That within-country relative income does not have a stronger effect in richer countries is in line with
the results presented in Israel and Levinson (2004).
10
So, why aren’t more governments doing more about this problem??
11
In the analog to the top left panel of Figure 6, Israel and Levinson (2004) find “after controlling for age,
sex, household income, education, and city size . . . low income countries display no pattern with respect
to GDP, while willingness to pay appears to decline for high-income countries.” I find a more uniform
decrease in WTP with GDP across my country-level fitted values.

12
Figure 5: Country-level fitted values (for the median income decile) of the probability
respondent is willing to pay part of his income for greater environmental protection
plotted against country characteristics. Log of per capita GDP (top left), Environmental
Protection Index (top right), Polity score (bottom left), and Economist Intelligence Unit
Functioning of Government score (bottom right).

Notes: Log of GDPC linear fit has R2 = 0.129. EPI linear fit has R2 = 0.106. Polity score has linear fit
R2 = 0.053. EIU linear fit has R2 = 0.089.

3.4 Do preferences affect environmental outcomes or do bad envi-

ronmental outcomes affect preferences?
The top right panel of Figure 5, where the fitted probability is plotted against the EPI
score, provides a hint. It seems that individuals in the middle of the income distribu-
tion are more willing to pay for environmental protection in societies that do not have
strong environmental protection already in place. Figure 6 provides further support of
this idea. Figure 7 plots carbon dioxide emissions in tons per 1000 US$ PPP-adjusted GDP
against the willingness to pay for greater environmental protection. The left-hand panel
plots emissions against the proportion respondents in the median-income decile who are

13
Figure 6: C02 emissions divided by GDP (Y-axis) and the percentage of respondents in
the median income decile willing to pay part of their income (on left) and the percentage
of respondents in the median income decile willing to pay higher taxes (on right).

Notes: WTPincM fit has R2 = 0.124. WTPtaxM linear fit has R2 = 0.121.

willing to pay part of their income and the right-hand panel plots emissions against the
proportion of median-income decile respondents who are willing to pay higher taxes.
The positive relationship implies that effective carbon emissions are higher in societies
that have a greater demand for environmental protection in the middle of the income dis-
tribution. Therefore, it appears that bad environmental outcomes drive the demand for
environmental protection, rather than the demand for environmental protection driving
policy that results in good environmental outcomes.

3.5 Miscellaneous empirical result

Finally, I investigate why in some countries there may be a greater willingness to pay a
part of their income, rather than higher taxes, to protect the environment. To this end,
I subtract the proportion of respondents that are willing to pay higher taxes from the
proportion willing to pay part of their income. Figure 7 plots these differences against
a measure of the quality of government. The left-hand panel considers the difference
among the proportions in the whole population, while the right-hand panel considers
the differences among the middle income decile. In both panels, it appears that the
difference is larger in societies where the government does not function as well.

14
Figure 7: Difference between willingness to pay higher income and willingness to pay
higher taxes against EIU functioning of government index. Entire population (on left)
and median income deciles (on right).

Notes: Linear fit on entire population has R2 = 0.084. Linear fit on median income deciles has R2 = 0.061.

4 Conclusion
This paper is not finished yet.

Appendix: Relevant literature to review

• On explaining policy preferences using survey responses:

– The most related is Tjernstöm and Tietenberg (2008), who look at climate
change policies.
– Israel and Levinson (2004) set out to show that marginal willingness to pay
for environmental protection is diminishing. They also use the WVS, though
the third wave, a different question, a near exclusive focus on income, and
linear probability rather than probit. They find no relation among low income
countries, and that MWTP does decrease with GDP for some rich countries.
See also Israel (2004).
– There has been a lot of work on this in the sociology literature. See, for
example, Bloom (1995); Franzen and Meyer (2010); Gerhards and Lengfeld
(2008); Kemmelmeier et al. (2002); Marquart-Pyatt (2008).
– Hainmueller and Hiscox (2007) look at immigration policies in Europe.

15
• On the role of income in determining individual preferences for environmental
protection: This is best fleshed out, as an assumption, in Finus (2003).

• On the role of democratic development in national environmental policy outcomes:

See Tjernstöm and Tietenberg (2008) for a (pretty weak) empirical investigation
and Congleton (1992) for a comparison of democracy versus autocracies (includes
a nice theoretical part. Jones and Manuelli (2001) provides a political economy
model of pollution/growth trade-off. Magnani (2001) discusses how individual
preferences are converted into public policy, with an eye towards deriving an inverted-
U EKC. Torras and Boyce (1998) includes “political freedom” as an explanatory
variable to explain differences in cross-country differences in pollution emissions.
Pargal and Wheeler (1996) looks at informal (local) regulations.

• Things to read via Tjernstöm and Tietenberg (2008) : Brechin and Kempton (1994);
Fransson and Gärling (1999); Martínez-Alier (1995); and Weaver (2003).

• Environmental Kuznets Curve:

– Stern (2004) and Dasgupta et al. (2002) review the literature. Stern (2004)
is more technical, and is extremely critical of the EKC literature, both theo-
retically and empirically. Copeland and Taylor (2004) also provides a critical
review, concluding (quoted by Stern (2004)) “Our review of both the theoreti-
cal and empirical work on the EKC leads us to be skeptical about the existence
of a simple and predictable relationship between pollution and per capita in-
come.” Martínez-Alier (1995) tries to say that environmental protection is a
luxury good that poor countries cannot afford. This seems to be debunked by
the reviews above, but it still may be interesting to read.
– Note that Grossman and Krueger (1993) were the first to use the term Envi-
ronmental Kuznets Curve. Andreoni and Levinson (2001) provides some “sim-
ple analytics” using scale arguments. López and Mitra (2000) investigates the
role of corruption. Ansuategi and Perrings (2000) considers transboundary
externalities.

• Franzen and Meyer (2010) identifies three theoretical proposals for explaining en-
vironmental concern:

1. Ingelhart (1995) has been the most prominent paper to promote the “post-
materialism” explanation... citizens of wealthier nations display more pro-

16
 environmental attitudes due to a shift from materialistic to post-materialistic
values in modern society (political freedom, individual self-fulfillment, and
environmental protection). This has been challenged since it seems that re-
spondents in developing countries are just as willing to pay for environmental
protection. Inglehart then formulates the “objective problems and subjective
values” hypothesis, in which wealthy societies want to protect the environ-
ment due to post-materialistic values and poor societies want to protect the
environment because they are faced with pressing environmental problems
(polluted cites, lack of clean water, etc).
2. The “Globalization phenomenon” argument holds that environmental concern
has spread to all countries, regardless of their level of wealth. See Dunlap and
Mertig (1995) and Dunlap and Mertig (1997) and Gelisson (2007) for support
of the globalization phenomenon explanation.
3. The “propensity” or “affluence” hypothesis, which is rooted in classical eco-
nomic reasoning [Baumol and Oates (1979)] and has been confirmed by
Diekmann and Franzen (1999) is the hypothesis that is supported the best
by Franzen and Meyer (2010). This hypothesis is closest to what I have mod-
eled in the theory accompaniment... that environmental quality is a public
good with individual demand that is normal (increasing in individual income
levels). More specifically, there may be diminishing marginal WTP for envi-
ronmental protection, so that the relationship between income and environ-
mental concern is not linear, but concave [Israel and Levinson (2004)].

• Other opinion surveys about the environment: International Social Survey Program
(ISSP) used by Marquart-Pyatt (2008) and Franzen and Meyer (2010).

Appendix: Tables

17
Table 1: SUMMARY STATISTICS – INCOME, WILLINGNESS TO PAY, AND ENVIRONMENTAL PERFOR-
MANCE I NDEX

Country 2002 GDP Mean Mean EPI

per capita WTP Income WTP Tax

Vietnam 188.80 0.963 0.908 73.91

Ethiopia 214.95 0.793 0.735 58.85
Moldova 391.66 0.648 0.552 70.74
Burkina Faso 461.76 0.805 0.753 44.34
Ghana 489.77 0.829 0.744 70.78
India 561.58 0.680 0.619 60.28
Georgia 762.03 0.781 0.470 82.18
Ukraine 932.78 0.472 0.472 74.10
Indonesia 946.63 0.722 0.590 66.19
Egypt 977.88 0.487 0.308 76.28
China 1017.73 0.824 0.737 65.08
Morocco 1323.47 0.446 0.388 72.09
Romania 1645.61 0.382 0.351 71.93
Serbia 2193.76 0.545 0.495
Thailand 2303.47 0.865 0.742 79.15
Bulgaria 2425.08 0.573 0.511 78.47
Poland 2505.23 0.528 0.467 80.49
Uruguay 2926.45 0.442 0.429 82.29
Turkey 3048.88 0.836 0.782 75.90
South Africa 3067.43 0.537 0.464 68.98
Brazil 3567.90 0.530 0.500 82.65
Mexico 3660.07 0.840 0.705 79.80
Malaysia 3966.54 0.619 0.533 83.98
Chile 4171.19 0.569 0.525 83.44
Trinidad 6706.43 0.747 0.593 70.36
Taiwan 0.835 0.648 80.83
South Korea 11181.23 0.772 0.521 79.36
Slovenia 11496.61 0.703 0.544 86.30
Cyprus 13437.93 0.734 0.631 79.19
Spain 17656.55 0.490 0.473 83.14
Italy 23345.75 0.614 0.521 84.22
Andorra 23581.01 0.628 0.629
Australia 24782.14 0.590 0.582 79.83
Germany 25910.90 0.354 0.264 86.31
Canada 26000.70 0.703 0.637 86.64
Japan 26926.48 0.665 0.535 84.54
United States 28052.26 0.514 0.505 81.03
Finland 34005.59 0.572 0.572 91.44
Sweden 34644.59 0.705 0.6955 93.12
18
Switzerland 36744.29 0.645 0.597 95.51
Norway 38525.73 0.685 0.679 93.12
Notes: GDP per capita is PPP-adjusted in 1990 US$, calculated by the United Nations Statistics Division.
Willingness to Pay variables are from the 2005-2008 wave of the World Values Survey, and is the
Table 2: DEPENDENT VARIABLE: WILLINGNESS TO PAY PART OF INCOME. PROBIT AVERAGE
MARGINAL EFFECTS, WITH COUNTRY FIXED EFFECTS

Variable Full Sample OECD Countries Non-OECD Countries

globalwarm (d) 0.0867*** 0.1276*** 0.0463*

(0.019) (0.015) (0.025)
incdec 0.0146*** 0.0166*** 0.0153**
(0.004) (0.003) (0.007)
worldcit (d) 0.1505*** 0.1561*** 0.1284***
(0.023) (0.030) (0.032)
natcit (d) 0.0245* 0.0089 0.0469***
(0.013) (0.008) (0.017)
hs (d) 0.0449** 0.0679*** 0.0191
(0.023) (0.020) (0.032)
books (d) 0.0731*** 0.0545*** 0.0834***
(0.011) (0.011) (0.016)
age 0.0001 0.0011*** -0.0001
(0.000) (0.000) (0.000)
neverfree (d) 0.0001 0.0002 -0.0013
(0.014) (0.015) (0.018)
epi -0.0298*** 0.0063*** -0.0029
(0.011) (0.002) (0.004)
epi2 0.0002**
(0.000)
lgdpc -0.0404 -0.0175 -0.0584
(0.025) (0.023) (0.041)
polity 0.0025** -0.1087*** 0.0026*
(0.001) (0.015) (0.001)
liberal (d) 0.0700***
(0.014)

N 41830 15470 24345

pseudo-R2 0.055 0.079 0.060
% Correct 67.97 68.30 68.48
Notes: *, **, and *** indicate significance at 10, 5, and 1 % levels, respectively. Standard errors (in
parentheses) are heteroskedasticity-robust. (d) for discrete change of dummy variable from 0 to 1.

19
Table 3: DEPENDENT VARIABLE: WILLINGNESS TO PAY HIGHER TAXES. PROBIT AVERAGE
MARGINAL EFFECTS, WITH COUNTRY FIXED EFFECTS

Variable Full Sample OECD Countries Non-OECD Countries

globalwarm (d) 0.0716*** 0.1225*** 0.0294

(0.019) (0.016) (0.023)
incdec 0.0175*** 0.0147*** 0.0214***
(0.004) (0.004) (0.006)
worldcit (d) 0.1453*** 0.1364*** 0.1346***
(0.021) (0.035) (0.026)
natcit (d) 0.0112 0.0298** 0.0090
(0.013) (0.012) (0.019)
hs (d) 0.0131 0.0571** -0.0251
(0.020) (0.024) (0.026)
books (d) 0.0759*** 0.0412*** 0.0973***
(0.011) (0.010) (0.015)
age -0.0000 0.0010*** -0.0005
(0.000) (0.000) (0.000)
neverfree (d) 0.0019 0.0086 -0.0079
(0.017) (0.022) (0.023)
epi -0.0430*** 0.0088** -0.0052
(0.013) (0.004) (0.003)
epi2 0.0003***
(0.000)
lgdpc -0.0257 -0.0281 -0.0484
(0.028) (0.030) (0.043)
polity 0.0025** -0.0652** 0.0025**
(0.001) (0.032) (0.001)
liberal (d) 0.0919***
(0.019)

N 41744 15482 24252

pseudo-R2 0.044 0.057 0.051
% Correct 61.81 61.94 63.57
Notes: *, **, and *** indicate significance at 10, 5, and 1 % levels, respectively. Standard errors (in
parentheses) are heteroskedasticity-robust. (d) for discrete change of dummy variable from 0 to 1.

20
Table 4: DEPENDENT VARIABLE: WILLINGNESS TO PAY PART OF I NCOME . LINEAR PROBABILITY
MODEL, WITH COUNTRY FIXED EFFECTS MODEL

Variable Full Sample OECD Countries Non-OECD Countries

globalwarm 0.0830*** 0.1222*** 0.0421*

(0.019) (0.015) (0.025)
incdec 0.0139*** 0.0148*** 0.0145**
(0.004) (0.003) (0.006)
worldcit 0.1500*** 0.1529*** 0.1281***
(0.022) (0.029) (0.030)
natcit 0.0231* 0.0075 0.0452**
(0.012) (0.008) (0.017)
hs 0.0454** 0.0654*** 0.0230
(0.022) (0.019) (0.032)
books 0.0694*** 0.0507*** 0.0786***
(0.011) (0.010) (0.016)
age 0.0001 0.0011*** -0.0001
(0.000) (0.000) (0.000)
neverfree -0.0003 -0.0017 -0.0003
(0.014) (0.014) (0.017)
epi -0.0244** 0.0063*** -0.0026
(0.010) (0.002) (0.003)
epi2 0.0002**
(0.000)
lgdpc -0.0380 -0.0170 -0.0528
(0.024) (0.022) (0.038)
polity 0.0021* -0.0966*** 0.0021*
(0.001) (0.013) (0.001)
liberal 0.0651***
(0.015)

N 41830 15470 24345

R2 0.067 0.097 0.072
Notes: *, **, and *** indicate significance at 10, 5, and 1 % levels, respectively. Standard errors (in
parentheses) are heteroskedasticity-robust. (d) for discrete change of dummy variable from 0 to 1.

21
Table 5: DEPENDENT VARIABLE: WILLINGNESS TO PAY HIGHER TAXES. LINEAR PROBABILITY
MODEL, WITH COUNTRY FIXED EFFECTS MODEL

Variable Full Sample OECD Countries Non-OECD Countries

globalwarm 0.0684*** 0.1185*** 0.0260

(0.019) (0.015) (0.023)
incdec 0.0168*** 0.0137*** 0.0202***
(0.004) (0.003) (0.006)
worldcit 0.1431*** 0.1323*** 0.1316***
(0.020) (0.033) (0.025)
natcit 0.0106 0.0283** 0.0083
(0.013) (0.012) (0.018)
hs 0.0134 0.0549** -0.0220
(0.019) (0.023) (0.024)
books 0.0729*** 0.0394*** 0.0921***
(0.010) (0.010) (0.014)
age -0.0000 0.0010*** -0.0004
(0.000) (0.000) (0.000)
neverfree 0.0014 0.0077 -0.0077
(0.016) (0.021) (0.021)
epi -0.0377*** 0.0085* -0.0048
(0.012) (0.004) (0.003)
epi2 0.0002***
(0.000)
lgdpc -0.0241 -0.0269 -0.0440
(0.027) (0.029) (0.040)
polity 0.0023** -0.0618* 0.0021*
(0.001) (0.029) (0.001)
liberal 0.0871***
(0.018)

N 41744 15482 24252

R2 0.067 0.097 0.072
Notes: *, **, and *** indicate significance at 10, 5, and 1 % levels, respectively. Standard errors (in
parentheses) are heteroskedasticity-robust. (d) for discrete change of dummy variable from 0 to 1.

22
Table 6: DEPENDENT VARIABLE: WILLINGNESS TO PAY PART OF INCOME. PROBIT AVERAGE
MARGINAL EFFECTS, COUNTRY-LEVEL REGRESSIONS

Country globalwarm incdec worldcit pr(wtpinc=1|incdec=5)

Vietnam 0.0276∗∗∗ 0.0027 0.0508∗ 0.9747+

Ethiopia 0.0422∗ 0.0249∗∗∗ −0.0669∗∗ 0.8435+
Moldova 0.0667∗∗ 0.0287∗∗∗ 0.0899∗∗∗ 0.6684+
Burkina Faso 0.0081 0.0022 0.1141∗∗ 0.8656+
Ghana 0.0394∗ 0.0008 0.0764∗∗ 0.8548+
India 0.0202 0.0157∗∗ 0.1473∗∗∗ 0.7973+
Georgia 0.0507∗ 0.0021 0.1010∗∗∗ 0.8038+
Ukraine 0.1137∗∗∗ 0.0427∗∗∗ 0.0306 0.4937
Indonesia 0.0575∗∗ −0.0077 0.0968∗∗ 0.7674+
Egypt −0.0825∗∗∗ 0.0325∗∗∗ −0.0422∗∗ 0.5189
China 0.0500∗∗ 0.0220∗∗∗ 0.0740∗∗ 0.8908+
Morocco 0.1030∗∗ 0.0530∗∗∗ 0.2830∗∗∗ 0.5148+
Romania 0.0877∗∗∗ 0.0203∗∗∗ 0.1104∗∗∗ 0.4037−
Serbia 0.3137∗∗∗ 0.0139 0.1368∗∗∗ 0.5713+
Thailand 0.0407∗∗ 0.0008 0.1288∗∗ 0.8751+
Bulgaria 0.1395∗∗∗ 0.0439∗∗∗ 0.1500∗∗∗ 0.6565+
Poland 0.0202 0.0157∗∗ 0.1473∗∗∗ 0.7973+
Uruguay 0.0276 0.0120 0.0903∗∗ 0.4491−
Turkey 0.1618∗∗∗ 0.0121∗∗ 0.0505 0.8733+
South Africa 0.0776∗∗∗ 0.0134∗∗∗ 0.1661∗∗∗ 0.5703+
Brazil 0.0809∗∗∗ −0.0001 0.1352∗∗∗ 0.5264
Mexico 0.0404∗ 0.0050 0.0613 0.8486+
Malaysia 0.0994∗∗∗ −0.0055 0.1369∗∗∗ 0.6262+
Chile 0.1151∗∗∗ 0.0319∗∗∗ 0.2044∗∗∗ 0.6075+
Trinidad 0.1348∗∗∗ 0.0083 0.0956∗∗∗ 0.7716+
Taiwan 0.0510∗∗ 0.0310∗∗∗ 0.0881∗∗∗ 0.8794+
South Korea 0.0913∗∗∗ 0.0280∗∗∗ 0.1147∗∗∗ 0.7881+
Slovenia 0.1176∗∗∗ 0.0056 0.1212∗∗∗ 0.7355+
Cyprus 0.1466∗∗∗ 0.0440∗∗∗ 0.1335∗∗∗ 0.7186+
Spain 0.2106∗∗∗ 0.0342∗∗∗ 0.3284∗∗∗ 0.5309
Italy 0.1032∗∗ 0.0137∗ 0.1590∗∗∗ 0.6537+
Andorra 0.0825∗∗ 0.0103 0.1404∗∗∗ 0.6283+
Australia 0.2139∗∗∗ 0.0070 0.0777∗∗ 0.6094+
Germany 0.1227∗∗∗ 0.0379∗∗∗ 0.1612∗∗∗ 0.3607−
Canada 0.0756∗∗∗ 0.0147∗∗∗ 0.0647∗ 0.7077+
Japan 0.0676 0.0130∗ 0.1230 0.6993+
United States 0.2310∗∗∗ 0.0120 0.0974∗∗∗ 0.5248
Finland 0.1647∗∗∗ 0.0243∗∗∗ 0.0508 0.5948+
Sweden 0.1017∗∗∗ 0.0022 0.0975∗∗ 0.7085+
Switzerland 0.1654∗∗∗ 0.0369∗∗∗ 0.1594∗∗∗ 0.6497+
23
Norway 0.0978∗∗∗ 0.0115∗∗ 0.0349 0.6851+

Positive 40/41 38/41 38/41

Significantly positive 35/41 24/41 33/41
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