Wouldn’t one expect either to find no correlation between the profitability / wealth of firms and their propensity to invest in green projects, or perhaps even a negative correlation? In other words, if “greener” is richer, then it makes lots of sense for those who need to pinch every penny to go green. Do we see evidence of this among consumers? Do poorer Americans buy “greener” cars at a greater clip than non-poor Americans (i.e. conditional on preferences, are a larger share of their car purchases greener than rich folks)? Do poorer Americans insulate their homes more frequently than their richer counterparts? Are poorer Americans more likely to install solar panels?
You might reasonably argue that the poor are credit constrained, which is why you are unlikely to see that in the data. And this may be true, particularly given the fact that many of the green subsidies that run through the tax code are not refundable credits (i.e. a refundable credit would mean that if you earn the credit and you have no net tax liability, the government will nonetheless send you a check). But lack of credit doesn’t seem to prevent lower income households from buying cars in the first place, or houses (remember the mortgage crisis) or any number of things (cell phone contracts that cost $1,200 per year or more). So it seems odd that such sure “good deals” are not a regular occurrence.
But what do we know more broadly about who adopts green technologies? A recent paper by economist Sarah Stafford asks the question: what factors lead universities to engage in “sustainability” initiatives? And what does she find?
Larger and wealthier institutions are more likely to adopt sustainability than smaller, less well-endowed institutions
She also finds that the “agency” problem in higher education reveals itself yet again, meaning that a convergence of interests from disparate stakeholders seems to be causing the investments, which explains why there is pressure to do these sorts of things. We’ve just conducted research here at the U of R to ask whether these investments nonetheless result in measurable “good” outcomes for colleges and universities. We will report the results shortly.