Climate Consumption and Climate Pricing from 1940 to 1990

Cragg, Michael; Kahn, Matthew E.

Compensating differentials studies have consistently found that temperate climate is capitalized into local wages and rents. This paper extends earlier single cross-section by studying the evolution of climate expenditure over time by estimating the same climate compensating differentials model every decade from 1960 to 1990. Over this time period, per capita expenditure on climate has increased ( particularly for the elderly). This increase is explained by both a rise in consumption and also a dramatic shift in climate price capitalization. From 1960 to 1990 there has been a large two-and-a-third increase in climate prices capitalized into rents and moderate 60 percent decline in climate prices capitalized into wages. Overall elderly households are paying much more for climate while the price paid by working households has roughly remained constant.



More About This Work

Academic Units
Department of Economics, Columbia University
Department of Economics Discussion Papers, 9697-18
Published Here
March 3, 2011


May 1997