The Inequality Trap: Testing Direct versus Indirect Effects of Resource Inequality on Collective Climate Action

Climate policy confronts an apparent equity-pollution dilemma. Empirical evidence demonstrates that income elasticity of carbon emissions consistently falls below unity, meaning a 1% increase in income translates to less than 1% increase in emissions. This sublinear relationship arises because wealthy individuals save larger income shares, while lower-income households allocate more to carbon-intensive necessities like heating and transportation. Consequently, scholars have argued under the equity-pollution dilemma framework that redistributive policies transferring wealth from rich to poor could paradoxically increase aggregate emissions.
Yet even with existing inequality, emission reductions remain insufficient to meet climate targets. Achieving these targets requires sustained collective action, which inequality may undermine by generating perceptions of unfairness and eroding social cohesion. When citizens perceive that burdens are distributed unequally, they become less willing to support climate policies or make personal sacrifices. We hypothesize that inequality’s indirect effects on social cooperation may outweigh its direct effects on consumption-based emissions.
We bring these competing forces together in a laboratory experiment using a collective risk social dilemma. Small groups must collectively contribute enough resources to avoid an environmental catastrophe that would eliminate all remaining endowments. We manipulate the level of inequality across conditions, creating groups with equal or unequal resource distributions. Crucially, we integrate the income-emission elasticity directly into our design by calibrating collective contribution thresholds: because unequal groups have lower baseline emissions, they face proportionally lower collective goals to avoid catastrophe. This design creates a direct test of the two opposing forces. Under the direct consumption effect, higher inequality should improve group outcomes because the collective target becomes easier to reach. Under the indirect cooperation effect, higher inequality should worsen group outcomes because it corrodes the willingness to cooperate, making even easier targets harder to achieve.
Participants make simultaneous contribution decisions without communication, reflecting real-world climate contexts where citizens make uncoordinated choices about political support, compliance, or consumption. The design generates a clean test: holding baseline emissions constant through threshold adjustment, do unequal groups cooperate more or less effectively than equal groups? Group-level success rates provide our primary outcome, measuring whether groups avoid catastrophe. Individual contribution patterns and fairness perceptions serve as secondary outcomes, identifying whether wealthy participants contribute proportionally less, whether poor participants withdraw contributions in response, and whether perceived burden-sharing affects cooperation.
Quantifying the relative magnitude of direct versus indirect effects will clarify whether addressing inequality represents an obstacle to climate action or a prerequisite for it.