Demographics and Emissions: The Life Cycle of Consumption Carbon Intensity

Abstract

The consumption carbon intensity – defined as the carbon emissions per unit of consumption – varies with age: it is hump‐shaped over the life cycle, but becomes flatter at high levels of income. We document this novel fact using US household‐level consumption data. This relationship holds not only at the individual level, but also at the aggregate: we leverage information across US states and countries all around the world to show that the carbon intensity of the economy depends on the population age structure. Consequently, policy changes that alter carbon prices affect relatively more middle‐age individuals, and especially so in low‐income economies.