Formal and actual similarities between…

There are obvious and (to some people) surprising similarities between global climate change and global inequality. Both are obviously global problems. Neither can be solved by a single country, group or individual. In both cases, there are significant externalities and consequently coordination problems. Both issues are even formally linked (that is, not only conceptually): elasticity of carbon emissions with respect to real income is around 1. This means not only that if person’s (or country’s) income increases by 10%, emissions tend to increase at the same rate, but that the distribution of emitters mimics the distribution of income. Since in the global income distribution the top decile receives at least 50% of global income, it is also responsible for at least one-half of all emissions.

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