Social inequality and environmental sustainability : exploring their quantitative relation through the channels of consumption patterns and interpersonal trust

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Social inequality and environmental sustainability

Exploring their quantitative relation through the channels of

consumption patterns and interpersonal trust

Bachelor thesis Political Science

Faculty of Social and Behavioural Sciences

Beheer van natuurlijke hulpbronnen

Lara Hendrikx

10814809

Supervisor: Dr. R.J. Pistorius

Second reader: Dr. E.M. Besseling

25

th

_{of June 2018}

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Abstract

The world needs to undergo a number of sustainable transitions, to be able to meet the demands of the coming generations. However, the social aspects of these transitions are often forgotten. Social inequality is one of these aspects. The hypotheses in this thesis are that inequality leads to increasing consumption and a decrease in interpersonal trust. This hampers environmental sustainability, respectively by worsening the problem and by hindering possible solutions. By means of scatterplots and correlations these relations are investigated on a global level. The empirical results do not support the theoretical framework about inequality increasing consumption by means of the catch-up effect. This is mainly because developed countries in general have a lower inequality while at the same time consuming more, because of their high level of economic development. Further research that makes a distinction between stages of development would therefore be necessary. The results logically support the hypothesis that consumption leads to a higher footprint, so the role of inequality remains relevant to look into. The results support the third hypothesis concerning interpersonal trust: it decreases as inequality is higher. However, the last link to sustainability is not yet possible to make, due to the lack of indicators and data that reflect the relatively new solution approach to sustainable development. The serious role of community action and local innovations is just recently recognized, leaving the statistical community and this research with a methodological gap. This finding leads to the recommendation to develop corresponding indicators to allow for statistical research in this area.

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Preface

My personal motivation for this thesis subject is the result of my internship at Milieudefensie. I was not familiar with the subject beforehand, but the longer I studied the subject, the more I discovered the number of aspects it has. Especially during a meeting in April with Milieudefensie and Nigerian environmental NGO’s and trade unions, the Just Energy Transition Conference 2018, the multiple aspects of the problem became clear. In the transition to sustainable societies, there are many concerns for workers in unsustainable industries. The creation of new jobs and retraining are important aspects of the solution, but not every country has the opportunities to do so. Many people worry that the benefits will be unequally distributed, or that the poor eventually will have to bear the burdens. Others argue that the transition will not have an effect when the majority of the citizens is not capable of participating in it. This leads to a broad question of how social aspects of transitions have to be dealt with, which was the starting point for both my internship and bachelor thesis.

There are many people that contributed to this process, for which I want to thank them. First of all, my bachelor thesis coordinator Robin Pistorius played an essential role in obtaining this inspiring internship and has been an active help throughout the whole process. Also, I became more and more interested in subjects concerning sustainability and transitions, because of his contagious enthusiasm. Second, my internship mentor Bart Wesselink was very involved in the whole process and I want to thank him for being open to new ideas and approaches. I want to thank my fellow students in this bachelor project for their feedback and helpful questions. Last but not least I want to thank my friends and family for their support and for the necessary relaxation.

Lara Hendrikx 25th_{of June 2018}

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1. Introduction

The world is in a phase in which it has to undergo a number of transitions, to adapt to and steer climate change. We are dependent on smart innovations and the creativity of niche actors to guide us through that process. Although in terms of technology one could say environmental transitions are accelerating, there are large social concerns that seem to get little attention in the public debate. Global inequality is an example of this, that will be further investigated in this thesis, but also unemployment, wages, housing and higher prices of goods and services are things people get affected by in their daily lives. This is why it is so important to look into these social aspects of sustainability transitions, before implementing and imposing them on people that feel like they have no benefit from it. Also in the academic world, there is little attention for the social aspects of sustainability transitions. Rather, research often focuses on the technological and financial aspects, but seem to forget that these transitions take place in societies where people will be affected by them in their daily lives. That is why it is so interesting to look at the conditions that at this stage hamper sustainability transitions in society.

The generally accepted idea until a few decades ago was that humanity and nature were two separate concepts that existed apart from each other. Economic development was seen as the basis for the well-being of humanity, with a focus on growth and production as the way to overcome poverty. (Hopwood et al. 2005: 38-39) The social and economic domain used to be seen as independent from environmental issues. But more and more, people start to realize that context matters for environmental problems. There is an ever-growing awareness that socio-economic problems like poverty and inequality have global links to environmental issues. These domains have been combined in what is now being called ‘sustainable development’. (idem: 39) In the Brundtland Report Our Common Future, where socio-economic and environmental issues were explicitly brought together, sustainable development is described as “the needs of the present without compromising the ability of future generations to meet their needs” (WCED 1987: 41). The

implication is that political decision making has to shift from a traditional towards a sustainability approach. This approach is graphically displayed in the

triple bottom line, as seen in figure 1

(Elkington 1997). It integrates three elements: People, Planet, Profit (the social, environmental and economic domain). It is important to show this figure for this thesis, because it is the foundation of the idea that is being

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6 investigated. It states that if one of the circles does not function properly, it will have a negative impact on the other ones (WCED 1987: 41-43).

1.1 Objective Milieudefensie & research question

Some environmental organizations also see that environmental issues cannot be solved without looking at the socio-economic context of the problems. These problems are the result of a complex system that also produces social and economic problems. (Hopwood et al. 2005: 41) Part of the concern is the growing global inequality while undergoing the sustainability transition, which is also a problem Milieudefensie is now focusing on. It is part of their ‘Just Transition’ theme, for which they want to make a case at the next climate conference (COP) in Poland in December of this year. Little research focuses on this relationship, so the mechanisms in which equality can lead to more sustainability is not yet scientifically supported in Milieudefensie’s case. My task is to delve into the subject and provide some clarity on this point. The question I use to conduct this research is the following: How does inequality affect environmental sustainability?

The results of this thesis, and potential further research into the subject, could be Milieudefensie’s basis for a more broad approach to environmental issues. It reflects a shift from ‘green’ movements to ‘social green’ movements. Still it is important to notice that there is a multitude of approaches concerning environmental issues. The concept of sustainable development has a lot of meanings and implications, that lead to a wide range of responses from different actors in society. (Hopwood et al. 2005) Caring about the environment is usually seen as the moral equivalent of caring about others, which would implicate that social concerns are easily included. But that is not necessarily the case; there are views that are either concerned with environmental issues, or socio-economic, while excluding the other. (idem: 42) It is therefore necessary to make a conscious choice about the underlying relations between the social and the environmental domain.

1.2 Structure of the thesis

I will answer my research question by using consumption and trust as intervening variables, as can be seen on the next page in figure 2. The sub-questions I use for my research are the following. How does inequality affect consumption patterns? How does inequality affect social trust? And how do these concepts affect sustainability? In chapter two I will collaborate on different theories concerning the relations between these concepts, forming the theoretical framework. In chapter three I discuss the research methods used for this thesis. In the fourth chapter, I will show the results by exploring the relevant data, interpret the found values and reflect on the theoretical framework. Lastly, chapter five is the conclusion in which I answer the research question, discuss the research process and collaborate on the implications the research has for Milieudefensie and further research.

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2. Theoretical framework

To answer the research question of this thesis, how inequality affects environmental sustainability, I will collaborate on these concepts in this theoretical framework. Important to notice here is that when talking about inequality, I refer to socio-economic inequality, as being the unequal within-country distribution of income and wealth (Stewart 2014: 349). As said in the introduction, social trust and consumption are the intervening variables1_{, respectively corresponding to the problem-side and the solution-side of} sustainability. In this chapter, I describe the relevant literature concerning the relations between the concepts, because it is the basis for the hypothesis that inequality leads to more unsustainability. On the one hand because inequality would stimulate consumption, on the other hand because it would drive distrust between people in a community. This chapter is divided into four paragraphs, referring to the four relations I collaborate on, as seen in figure 2. After each section, I will formulate a separate hypothesis that will be used to answer the main research question.

Figure 2: Theoretical model

2.1 Inequality and consumption

Firstly, I will focus on the aspect of consumption as an intervening variable between inequality and sustainability. The theories used to explore this relationship are the catch-up effect or theory of convergence and the Veblen effects. The general idea in these theories is that people on average consume more if the inequality in a country is higher (Frank 2007: 43). Consumption here is not defined in the

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8 narrow sense, meaning only the consumption of food and drinks, but in a broad sense, meaning all the goods and services a household consumes. This effect can be seen both nationally and internationally. The sub-question of this section is the following: how does inequality affect consumption patterns?

2.1.1 The catch-up effect in national consumption patterns

In international development studies, the theory of convergence states that poorer countries will converge to wealthy economies in terms of per capita income as the result of an accelerating growth, as poorer countries ‘catch up’ with the developed technologies. Developing countries can grow faster due to the principle of ‘diminishing returns’, which implies that the income or wealth per extra item of output decreases, as is the case in developed countries. This is also due to the fact that poor countries can replicate technologies, innovations and institutions of developed countries, instead of developing these themselves, where investments and time would be needed for. At the same time, the economies of developed countries keep growing steadily, leading to a continuous increase in consumption and production patterns. (Stewart 2015: 347)

For this thesis, the national form of the catch-up effect is more important, because it states something about human behaviour. The catch-up effect on the local level shows why people consume more in more unequal countries, leading to a higher national consumption average. It has to do with people’s need to act within a certain frame of reference, in which they make their individual decisions. (Frank 2007: ix) People tend to imitate those that are just ‘above’ them in terms of the social and economic ladder, even when it’s above their budget or even when they know their behaviour is harmful, either individually or in aggregate (Dorling 2010: 10). This effect is the strongest with ‘positional goods’, goods where relative evaluation matters the most. ‘Non-positional goods’ are goods where context matters the least. (Frank 2007: 2-3) Examples of positional goods are houses, cars and clothing, goods one can compare easily to another person. Examples of non-positional goods are food and yearly vacation days. The existence of positional goods leads to so-called ‘positional arms races’ or ‘expenditure cascades’. (Frank et al. 2010: 57) It means that increased spending by the top earners leads to increasing costs for middle and low income families, because they want to catch-up with what they feel is standard within the community. The effect occurs in small steps, so the near rich compare to the rich, the rich middle incomes to them, the middle income class to them, etcetera. (Frank 2007: 43) An example of this is Singapore, which has the largest average consumption per household, while at the same time having one of the highest inequality ratio’s (top 10% earns 18 times more compared to the lowest 10%) (Dorling 2010: 12).

2.1.2 Veblen effects on consumption

A related theory concerning the relationship between inequality and consumption is part of the emulation theory. In his book The theory of the leisure class (1899), Veblen describes an economic system based

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9 on social class, stratification and division of labour that is still considered relevant nowadays. Veblen states that everywhere where private property exists, a struggle arises between people for the possession of goods (Veblen 1899: 13). Property is seen as the evidence of success, becoming the most important thing in obtaining esteem and a reputation in a community (idem: 15). It makes it necessary, for everyone’s self-respect, to possess the same amount and quality of goods as others in his or her social class (idem: 16). It leads to the process of ‘conspicuous consumption’, which means that people buy high priced goods and services to display a higher social status and wealth, rather than just buying the goods they need. ‘Emulation’ means that people strive to gain a higher status within their social class, by emulating the consumption patterns of the highest members of their class. It even means consuming more and overpriced products and services which they cannot really afford, while there are affordable products available. But because those products are perceived as being of low status or low quality, people will put themselves in debt to strive for a higher social status. (Veblen 1899: 40)

Hypothesis 1: more unequal countries have higher consumption patterns

2.2 Consumption and sustainability

The way in which consumption leads to unsustainability is the result of individually harmful behaviour and the unsustainable practices that are behind these patterns. Most commonly associated with sustainable consumption are the sustainable use of resources and the minimalization of waste and pollution. (UN 2015) Unsustainable consumption leads to an increased ecological footprint. The ecological footprint of consumption consists of a number of different indicators, which altogether represent the ecological assets needed to produce the natural resources consumed by an individual or population, and to break down its waste. (Global Footprint Network 2018) The largest shares of the ecological footprint are the water footprint and the carbon footprint, so I will collaborate on those two some more. The sub-question for this section will be the following: how does consumption affect sustainability?

2.2.1 Water footprint of consumption

The first way in which consumption relates to sustainability is by the usage of water. The best indicator of this process is the water footprint. It measures the amount of water used to produce each of the goods and services we use, measured over the full supply chain (Hoekstra et al. 2011: 2). The water footprint of consumption is determined by the demand of the consumers and how water-intensive the demanded goods and services are. Of the global water usage, by far the largest part (92%) is being determined by the consumption of agricultural goods, for example for the production of crop and livestock. (Hoekstra & Mekonnen 2012: 3234) The remaining part corresponds to water use in industries and domestic use. With an increasing consumption, the demand in all three categories grows. When demand exceeds

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10 supply, water shortages occur. (Chiras 2016: 273) In addition, not only does the pressure on agricultural production increase due to the world’s growing population, but there is also a danger of higher consumption patterns due to inequality, as described in the previous section. It has already led to a decline in per capita food production, which will continue to decline in the coming decades. (idem: 187) The water footprint is therefore an important aspect of people’s total ecological footprint.

2.2.2 Carbon footprint of consumption

CO₂ emissions from consumption are the second important aspect of the ecological footprint. This includes not only the ‘direct’ CO₂ emissions of households (heating, cooling and refrigeration, electronic appliances, lighting, washing, drying and cooking), but attributes all CO₂ emissions of consumed products and services to the final consumer. (Global Footprint Network 2018) For example, the carbon embedded in the making of aluminium for a car and the fuels needed to transport products from China to a consumer front door (Storm & Mir 2017).

Hypothesis 2: higher consumption patterns lead to a higher ecological footprint

2.3 Inequality and trust

After exploring the consumption variable as a part of the problem-side of sustainability, I will now turn to the solution-side, using social trust as intervening variable. The question now is not how inequality worsens the problem, but how inequality hampers possible solutions. On the basis of the literature, I figured that interpersonal trust would be a logical explanatory intervening variable in the study into the relationship between inequality and sustainability. The sub-question in this paragraph is the following: how does inequality affect social trust? In general, countries with higher income inequality scores tend to have lower social trust levels (Alesina & La Ferrara 2000: 3; Jordahl 2007: 4-5).

2.3.1 Social capital

Social trust is part of a broader concept called social capital. It is a concept brought up by Putnam (1993) when talking about humans and their social environment. It refers to the social networks between people and the reciprocity and trustworthiness that arise from those. His point is that social capital, just as physical capital and human capital, can increase the productivity of both individuals and groups. (Putnam 2000: 19) By the CBS (Central Bureau of Statistics), social capital is seen as a combination of participation, trust and integration (CBS 2011). In both definitions, interpersonal trust is being appointed as essential for social capital, so I will focus on that aspect for this thesis, but further research could show how the other aspects might relate to inequality and sustainability. There are different sorts of trust, but for this research I focus on generalized social trust. It displays how much people trust other people in general. (CBS 2011: 8) According to Fukuyama (1995) and Putnam (1993), these trust

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11 relations can increase contact between people and the willingness to act for the sake of the group or the community (CBS 2011: 8), something I will refer back to in the next paragraph.

But what exactly are the mechanisms in which inequality relates to interpersonal trust? First, from psychological research we know that people tend to have more social ties to people that are similar to them. This similarity suggests trustworthiness and familiarity, which also applies to income level and social class. This implies that in communities where income inequality is higher, community trust is lower. (Alesina & La Ferrara 2000: 3; Jordahl 2007: 4) In addition, this weakens the sense of shared norms and values and a common goal. Social networks are an important part of people’s interpersonal trust. (Coffé & Geys 2006: 1055) Second, the intervention of social relationships can also lead to a declining trust in communities. Here, inequality can be seen as a form of untrustworthy behaviour. (Jordahl 2007: 4-5) Furthermore, relative deprivation concerning one’s economic position can also lead to distrusting other people (Fisher & Torgler 2006: 5). Third, inequality can lead to conflicts, which lead to a declining community trust, for example concerning resources. By some groups society is seen as an arena in which different groups compete, which takes away the sense of a common goal. (Rothstein & Uslaner 2005: 46; Ortiz-Ospina & Roser 2017) Social trust is thus negatively affected by inequality.

Hypothesis 3: in more unequal countries people have less interpersonal trust

2.4 Trust and sustainability

After exploring how inequality can decrease social trust, in this section the following sub-question will be explored: how does social trust affect sustainability? There is a firm literature basis connecting social trust and the broader concept of social capital to concepts of sustainability. The central argument is that collective action problems can arise and cooperation on a community-level is hampered when social trust is low or declining (Kemp-Benedict 2013: 779). It hampers the mobilization of collective efforts needed for the protection of common property resources (Islam 2015). In addition, collective action is not only needed for the protection of resources, but also for adaptation and resilience concerning climate change (Beitl 2014: 93). I will collaborate on these mechanisms in the following sub-paragraphs.

2.4.1 Overcoming collective action problems by building on trust

The well-known scenario about the ‘tragedy of the commons’ described by Hardin (1968), provides a theoretical insight into how common goods and collective action works. He saw people as rational actors that without control would maximize their own interests. He explained this with the example of herd size. For each individual cattle owner, it would be beneficial to increase his or her herd size, because it would mean more income. However, the more cattle there is, the more the common land will deteriorate, due to overgrazing. The costs of the deteriorated land had to be shared by the community. This led to a

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12 spiralling decay of the commons. (Chiras 2016: 247) As Hardin famously wrote: “freedom in a commons brings ruin to all”. It is a simplified model to explain why people tend to abuse common land and the environment. However, Ostrom (1999) stated that this theory was not supported by empirical research. Ostrom does not see people as ‘norm-free maximizers of immediate gain’, who are unwilling to cooperate for long-term benefit goals. Secondly, she states that groups must not always be seen as a set of rules and regulations with central direction, because some groups are able to organize themselves. (Ostrom 1999: 496) Her most relevant conclusion for this research is that people are willing to make promises about using the commons and cooperation, as long as they perceive the other as ‘trustworthy’. Most individuals want to build a trustworthy reputation by reciprocating that trustworthiness, leading to the ability of solving problems without external pressure. (idem: 507) Trust is being supported by the sanctioning of those who break agreements (idem: 508). In sum, Ostrom’s theory shows how the commons can be managed, by building on community-level trust.

It is clear that in the rational choice theory, human behaviour is explained in terms of cost-benefit analysis, just like Hardin’s explanation about the commons. However, the social context of human choices, as explained by Ostrom, are rarely included in these theories. It has led to the understanding that social relationships can themselves have a positive impact on individuals and society as a whole, (Rudd 2000: 131-132) Collective action problems arise when there are no incentives for individuals to not act purely in their self-interest and ‘free-ride’ on the efforts other individuals are making. When not everyone is part of the strive for sustainability, collective action problems jeopardize environmental quality. (Rudd 2000: 132) Conditions for collective action are communication, trust and a common vision among individuals in the community (Beitl 2014: 93). As collaborated on in the previous section, inequality weakens all of these conditions. Social capital thus is an important aspect of the incentives for sustainable choices. It is more and more being seen as an alternative to the top-down policies imposed by international financial organisations that have a purely economic approach. (Portes & Landolt 2000: 530)

2.4.3 Thinking globally, acting locally

The reason that collective action problems arising from a lack of trust are relevant in sustainability issues, is because people and (local) governments start to realize that community action should be included in sustainability policy. This is because it requires active and participating citizens and strong local institutions to implement and carry out policies relating to sustainability issues. (Seyfang & Smith 2007: 587) Bottom-up initiatives can influence human behaviour more than top-down measures (ibid.; Hargreaves et al. 2011: 6), because the latter struggles with a lack of community knowledge when deciding what measures ‘fit’ best (Seyfang & Smith 2007: 594). The role of the government is to provide the necessary conditions to increase social capital (idem: 587).

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13 Civil society is also important for the existence and functioning of sustainable niches. A niche is a protected space in which innovations and experiments can develop without regime selection pressures. (Seyfang & Haxeltine 2012: 383) Important factors in this process are managing expectations for a common goal, the building of social networks and learning (Kemp et al. 1998: 189-191). As said, trust has an important role in the creation and sense of a common goal, which could make the development of niches easier. Grassroots initiatives can be seen as niches. They are bottom-up networks that create sustainability solutions on a local level, responding to the needs, interests and strengths of local communities. (Seyfang & Smith 2007: 585) An active civil society is essential for the existence of these innovations, because it experiments with social and green technologies, that have to be replicated, scaled up and translated into mainstream culture (Seyfang & Haxeltine 2012: 384). Examples of these local initiatives are community-supported agriculture, recycling projects and conservation methods for energy use (idem: 388). Their impact may seem small, but when they increase in number and lead to wider policies, in aggregate their impact is substantial (Church & Elster 2002: 25). In turn, these local developments can lead to the creation of jobs, community-sense, social capital and more civic engagement, leading to sustainable communities in a socioeconomic sense as well (Seyfang & Smith 2007: 593).

Hypothesis 4: less interpersonal trust hampers sustainability solutions

2.5 Conclusion

This chapter is meant to lay a theoretical framework under the quantitative approach this thesis has. The above theories have led to four hypothesis concerning the relation between inequality and sustainability. First of all, inequality will lead to an increased consumption, due to the catch-up effect, driving people to consume more to imitate higher social classes. Secondly, more consumption is unsustainable, due to people’s increased ecological footprint. Thirdly, as a result of inequality, people have less interpersonal trust. That in turn hampers sustainability, because trust is necessary for overcoming collective action problems and for local innovations.

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3. Methodology

In this methodology section, I will describe the research methods for this thesis. I will make use of a quantitative approach, following the preferences of my internship at Milieudefensie. To do this, I have to quantify the concepts of inequality, consumption, trust and sustainability. To begin with, I visually displayed the concepts and intervening variables in the conceptual model in figure 3. The bottom arrow reflects the two hypotheses about inequality leading to distrust and consumption. The arrow on the right reflects the other two hypotheses, about how the intervening variables are unsustainable. The arrow on the left indicates that there are more ways thinkable in which inequality leads to unsustainability, which could be the subject of further research and will be part of the discussion.

Figure 3: Conceptual model

3.1 Quantitative approach and method of analysis

For this research I will make use of a quantitative approach, using data from several databanks to conduct my research. I will do a secondary analysis, meaning that I will analyse data that I have not obtained myself (Bryman 2012: 311). The independent variable in this research is inequality, which means that inequality may or may not have an effect on the dependent variable. The dependent variable is sustainability. I will later explain how I measure these concepts. There are two other variables in this research, the intervening or mediating variables, interpersonal trust and consumption. Intervening variables are variables that help to explain the mechanism between the independent and dependent variable. The subjects, the entities I look at in this study, are countries. The total ‘population’ and geographical span are therefore the whole world. (Agresti & Franklin 2009: 8)

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15 To test my hypotheses, I will make scatterplots, look at the correlation values and reflect on them. I use the statistical program SPSS to do this. Scatterplots work well to see how two variables are related. A correlation, expressed as Pearson r, describes the linear relation between two quantitative variables. The corresponding value indicates two things: the direction of the association between two variables and its strength. It is expressed in a number between -1 and 1. The stronger the association between two variables, the closer the value will be to 1 or -1. They respectively denote a positive or a negative relation between the concepts. (Agresti & Franklin 2009: 108) However, a correlation value does not say anything about the direction of the mechanism. The score stays the same, whether you use x to predict

y, or whether you use y to predict x (idem: 596). It only shows to what extent two concepts are associated.

To interpret the correlation strength and to say something about the size of the effect, one can quadrate the founded value of r. That value (R²) is called coefficient of determination, and it explains the proportion of variation in y-values that is accounted for by the linear relationship of y with x. (Agresti & Franklin 2009: 123) An important aspect of correlations and coefficient of determinations is that they do not imply causation (idem: 136). An overview of correlation strength can be found in Appendix 1. The significance level for this research will be at 5%, so the results are significant when p < 0,05. It means that there has to be a 5% or lower change that the found values are based on coincidence. (Bryman 2012: 347-348) Important to notice is that for this research, due to time and resource limitations, I will only look al ‘gross’ correlations, because I do not look further than the four concepts of inequality, consumption, interpersonal trust and sustainability. There are undoubtedly many other factors that influence the described concepts and relations. Further study would be necessary to look into this ‘net correlation’. (Islam 2015: 5)

3.2 Operationalization and data

Before being able to conduct any research into the concepts of this thesis, I have to explain what the concepts mean for this research, the corresponding indicators and how they are measured. The descriptive statistics can be found in Appendix 1. All the below mentioned indicators are on a scale level, allowing for the use of correlations and scatterplots (Agresti & Franklin 2009: 108).

3.2.1 Inequality

In this study, income inequality will be used as an indicator of social inequality. There are multiple ways to measure income inequality, but for the purpose of this research and time and resource limitations, I will use the Gini index to test the hypotheses. An advantage of the Gini index is that scores are available for most countries and the data is of relatively good quality, as opposed to other measures of inequality (Jordahl 2007: 7). That allows for the most accurate cross-country comparison. Data concerning income inequality is coming from the World Bank. The Gini index measures the extent to which income is

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16 distributed among individuals and households in an economy (World Bank 2018). The higher the Gini score is, the higher the inequality in a country is. Scores are obtained from 1981 till 2013. Not all countries participated in every wave of data collection, so to make sure to include a Gini score for the maximum number of countries, data from multiple years are included, of which the most recent score is used. (World Bank 2017)

3.2.2 Consumption

Consumption is being operationalized as ‘household final expenditure per capita’, an indicator coming from the World Bank, expressed in constant 2010 US dollars. It is the market value of all goods and services purchased by households, including durable products (for example cars, kitchen appliances, electronic equipment). It does not include the purchases of houses, which is a disadvantage considering the fact that houses are good examples of positional goods. However, it does include the imputed rent of owner-occupied houses, which reflects the sort of house people live in. Finally, it also includes payments to (local) governments for licenses and permits. (The World Bank 2018) Data is from the most complete recent year, which is 2015.

3.2.3 Interpersonal trust

Data concerning interpersonal trust are obtained from the World Values Survey (WVS). It is the best source for this research, because it allows for a cross-country analysis and has a global geographic coverage. Data were obtained in multiple waves from 1984 till 2014. In the last two surveys (wave five and six), respondents were asked the following question: “Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people?” Two answers are possible: “Most people can be trusted” and “Can’t be too careful”. (Inglehart et al. 2014) To make the question suitable for statistical analysis, I calculated the percentage of people per country that answered that most people can be trusted. That percentage comes closest to an average trust score per country. I am aware of the limitations that this approach has, but there is limited global data on this subject. The last two waves included 80 different countries in total, so that is the amount I can use for my research (WVS 2005-2009; WVS 2010-2014). An important note has to be made about survey data. One always needs to keep in mind that a respondent’s answer might not reflect the actual situation of behaviour. A respondent might state that he is a trusting person, but he or she might not show behaviour that reflects this statement. (Alessina & Ferrera 2000: 5)

3.2.4 Unsustainability

As stated in the introduction, sustainability has a lot of different aspects. Because I look into two different relations, sustainability has to be operationalized in two indicators. For the first relation, that includes the consumption variable, sustainability is measured as the ecological footprint of consumption.

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17 It does not only include the footprint of consumer expenditures, but also of the manufacturing needed for all the goods and services that consumers buy. Data to measure this indicator comes from the Global Footprint Network (2018), data year 2014. It calculates the different aspects of the ecological footprint and the total, for both countries and regions. As said, it includes the direct and indirect emissions coming from all consumption related activities of citizens from a country in one year. (Footprint Network 2018) It is a better indicator than just CO₂ emissions, because the production of goods and services are often relocated to other countries (Storm & Mir 2017). The Footprint Network displays a countries’ average footprint per capita in global hectares. The Network also includes data concerning the carbon footprint per capita, the largest part of people’s footprint. It is calculated as the land necessary to absorb people’s carbon emissions. (Footprint Network 2018) Data for the water footprint comes from the Water Footprint Network. They display the water footprint of consumption for each country per capita, calculated as m³ per year. The analysed data are from the period between 1996 and 2005. As said in the theoretical framework, it concerns water used for consumption, in agriculture, industries and domestic use. (Mekonnen & Hoekstra 2011)

The solution-side approach to sustainability is difficult to operationalize in quantitative research. There are no obvious indicators that show how much a country ‘does’ to become more sustainable. Especially local initiatives or grassroots innovations, the indicators that reflect the theoretical framework, are hard to translate into data that allow for cross-country comparisons. Most studies into local cooperation’s – as the term ‘local’ indicates – are case studies and not on a quantitative base. However, there are a few indicators that come close to a solution approach to sustainability.

First of all, the ‘Transition Readiness Index’. It is applied to the energy system, but could also be seen as a general transition readiness score when the aspects are applied to other domains. A countries score is based on 23 different indicators, aggregated into six categories (World Economic Forum 2018: 27). One category is called ‘Human capital and consumer participation’, so they also include some social aspects, which is quite unique in transition studies. It looks at work possibilities in sustainable industries and the quality of education. (idem: 28) Unfortunately, that does not fully comprehend the relation with interpersonal trust I am trying to measure. Second of all, the Organisation for Economic Cooperation and Development (OECD) has developed the ‘Better life index’. It’s an interactive program in which people from all over the world can indicate what makes for a better life. Two indicators that could possibly say something about local innovations are community (quality of support network) and civic engagement (stakeholder engagement and voter turnout). (OECD 2018) However, although this may say something about how people evaluate social capital or political participation, it does not yet fully comprehend the sustainability solutions I try to measure. In addition, only a small fraction of the world population participates (100.000 people from around 180 different countries), so it’s hard to say something about scores per country. The site indicates this too; it states that it does not represent

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18 statistically relevant samples (OECD 2018). The last index I want to mention is the ‘Global Cleantech Innovation Index’, composed by the Cleantech Group and the World Wildlife Fund (WWF). It is the first study that examines why some entrepreneurial companies developing sustainability solutions flourish in certain regions or why not, and how economic, social and environmental factors affect these processes. (Sworder et al. 2017: 7) It is based on innovation ‘inputs’ and ‘outputs’, for which each country has been assessed and assigned a score to. Although the general innovation drivers could reflect the innovation culture in a country, the biggest disadvantage is that this index has a market-based business approach (idem: 18), instead of a bottom-up, local initiatives approach.

3.3 Conclusion

The most important conclusion of this chapter is that the three indexes just described, reflect the theoretical framework to a certain extent, but they are not enough based on community action and local initiatives to use them for an analysis about their relation with social trust. It is a methodological gap for this research and every other researcher that holds a quantitative approach to sustainability issues. Especially the need to choose an indicator for which reliable and global data is available makes the search more difficult. Further research is necessary to fill this gap and make quantitative research into this subject possible. I come back to this topic in the results section.

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4. Results

In this chapter I will explore the four hypotheses composed in the theoretical framework, by connecting the data about inequality, consumption, trust and sustainability. In the scatterplots I displayed the country names for the most obvious outliers, the Netherlands, United States of America and China. Furthermore, I made a distinction between developed economies, economies in transition and developing economies (UNDESA 2014: 145-146), marking them respectively with the colours blue, yellow and red. I will collaborate on the findings that the scatterplots and correlations provide.

4.1 Inequality and consumption

Hypothesis 1: more unequal countries have higher consumption patterns

The first hypothesis leads to an unexpected outcome. As seen in the scatterplot in figure 4, there is a downward trend in which more unequal countries do in fact have lower consumption patterns. The results show that there is a significant negative correlation between inequality and consumption, r (124) = 0.372, p < 0.05. The Pearson correlation score of 0.372 indicates a weak correlation strength. The coefficient of determination (R²) is 0.138, which means that 13,8% of the variation in consumption can be explained by the linear relationship between inequality and consumption.

Figure 4: Scatterplot Gini (1981-2013, most recent score) & consumption (per capita, year 2015). Geographical span: world (N=215). Colour refers to level of development (UNDESA 2014: 145-146).

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20 Striking however is the difference in developed economies, economies in transition and developing economies. A possible explanation for this outcome is that developed countries generally speaking have better economic conditions (UNDESA 2014: 143), meaning they are less unequally distributed and have higher average income levels, which means their population consumes more. The other way around, economies in transition but certainly developing economies have a more unequal income distribution, and have to deal with much more poverty, leading them to consume much less than developed economies. It is reflected in the ranking of Gini scores; the countries at the bottom of the list are mainly developed countries, while the highest Gini scores belong to developing countries. This can also be seen in figure 4, where developing countries are grouped at the bottom and on the right, indicating high inequality and low consumption patterns. It indicates that consumption is mainly influenced by the general welfare, of which an equal distribution is a part.

It also indicates that the catch-up effect can’t be observed on a global level. Because the relation is about human behaviour, it may be better suited to be studied at the community or country level. A suggestion for further research could be to look at three developing economies, for example Chili, Argentina and South Africa, and investigate to what extent the catch-up effect can be seen there. Another way to be able to study this effect may be to take the distinction between different levels of development into consideration beforehand and look into differences within these groups. Comparing countries with a similar economic level, minimizing the effect welfare has on the consumption patterns of households, will allow for a more accurate research into the catch-up effect. For this research however, I must conclude that a cross-country comparison cannot be made concerning the catch-up effect, due to other factors that influence consumption more than inequality.

4.2 Consumption and sustainability

Hypothesis 2: higher consumption patterns lead to environmental degradation

The relation between consumption and sustainability is the clearest from all four relations. The statistical outcomes support this. As seen in the scatterplot in figure 5, the higher the consumption patterns of people are in a country, the higher their footprint is. The results show that there is a significant positive correlation between consumption and footprint, r (137) = 0.67, p < 0.05. The Pearson correlation score of 0.67 indicates an above average correlation strength. The coefficient of determination (R²) is 0.449, which means that 44,9% of the variation in ecological footprint can be explained by the linear relationship between consumption and footprint. Also in this scatterplot there is a notable difference between levels of development, for the same reason as in the previous paragraph. Developed countries have higher consumption patterns due to their higher average incomes, which is reflected in a higher ecological footprint.

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21

Figure 5: Scatterplot consumption (per capita, year 2015) & ecological footprint (per capita, year 2014). Geographical span: world (N=138). Colour refers to level of development (UNDESA 2014: 145-146).

A notable outlier in the scatterplot is Qatar, the highest dot in the scatterplot. The country has an average household consumption of around $12.000 and an ecological footprint per capita of 15.7, of which the latter is the highest of all included countries. Other Gulf states in the Middle East region, like Kuwait, Bahrein and the United Arab Emirates, show similar patterns. It can be explained by the large dependence on fossil fuels, what accounts for a high footprint. Also most lifestyles in the region are unsustainable, for example due to the massive use of air-conditioning and the need to desalinate water. (Alraouf 2014: 201)

There is a notable difference in the correlations with ecological, water and carbon footprint. First of all, there is a significant very weak positive correlation between consumption and water footprint, r (128) = 0.297, p < 0.05. The coefficient of determination (R²) is 0.088, which means that only 8,8% of the variation in water footprint can be explained by the linear relationship between consumption and water footprint. The fact that the water footprint seems to be less determined by the linear relation with consumption, can be due to the fact that it is not consumption volume alone that determines the footprint. Consumption patterns of the population, a countries climate and the water use efficiency all co-determine the water footprint of a households consumption. (Hoekstra & Chapagain 2007: 43) In most developing countries, the latter two demand more water, increasing their water footprint and levelling them with developed countries. Secondly, there is a significant average positive correlation between consumption and carbon footprint, r (132) = 0.615, p < 0.05. The coefficient of determination (R²) is

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22 0.378, meaning that 37,8% of the variation in carbon footprint can be explained by the linear relationship between consumption and carbon footprint. It makes sense that the association between carbon footprint and consumption is stronger and more in line with the total ecological footprint, because the burning of fossil fuels accounts for the largest share in humanities footprint (Footprint Network 2018).

4.3 Inequality and trust

Hypothesis 3: in more unequal countries people have less interpersonal trust

The scatterplot in figure 6 supports hypothesis 3. The general trend is that a higher Gini score leads to a lower trust score. The results show that there is a significant negative correlation between inequality and trust, r (69) = -0.417, p < 0.05. The Pearson correlation score of 0.417 indicates a weak correlation. The coefficient of determination (R²) is 0.174, which means that 17,4% of the variation in trust can be explained by the linear relationship between inequality and trust.

Figure 6: Scatterplot Gini (1981-2013, most recent score) & trust (2005-2014, most recent score). Geographical span: world (N=68). Colour refers to the level of development (UNDESA 2014: 145-146).

The countries with the highest trust scores are China, Finland, the Netherlands, Norway and Sweden. Although the last four did not surprise me, the Scandinavian countries and the Netherlands are known to have relatively high levels of development, I did not expect China to be in the top five trust scores. China is a developing country, with a lack of democratic institutions. However, studies show that trust

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23 can also be the result of a tradition of solidarity, the existence of communities and economic growth, of which all three are applicable on China. (Tang 2004: 5-6)

4.4 Trust and sustainability

Hypothesis 4: less interpersonal trust hampers sustainability solutions

As stated in the methodology section, finding a quantitative relation between inequality and sustainability using trust as an intervening variable, is hampered by the lack of data that reflect information about community action or local initiatives. Sustainability data are usually focussed on what the problem is, for example by CO₂ emissions or human footprints. However, as stated in the introduction, there is a growing awareness that climate issues go beyond the environmental domain. More and more people start to realize that social and economic factors affect the state of the environment, leading to the awareness that people themselves can have an active role in combating climate change. However, this shift just recently took place, leading to a current lack of indicators and data that reflect this new paradigm. It is even more recent that this new paradigm is reflected in global goals, such as the Sustainable Development Goals (2015). Since the Millennium Development Goals of 2000, there has been some progress to resolve the big gaps in data availability and coverage. But there is an ongoing discussion on how to improve it even more, because there are still serious data gaps, even for already existing indicators. (Cassidy 2014: 2; Chen et al. 2013: 1) The relatively new local solution-approach of sustainability issues demands new indicators that reflect the role of communities and individuals in combating environmental degradation. The indexes named in the methodology section are reflections of the more broad conception of sustainable development. However, it is clear that there are still gaps in the availability of new indicators and corresponding data.

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5. Conclusion

There are multiple ways in which inequality affects sustainability issues. This thesis gives an insight into two of these mechanisms, in order to provide a basis for further research into this subject and give Milieudefensie the tools to work on their Just Transition agenda with more scientific knowledge. The link between inequality and consumption is not clear yet: the theoretical base for the catch-up effect is strong, but empirical evidence is still missing. Other forms of research are necessary to look into this relation more in depth. The logical hypothesis that consumption leads to a higher footprint is supported by the empirical data, so the question of how inequality affects consumption is still relevant.

Second of all, empirical evidence supports the hypothesis that in more unequal countries, interpersonal trust is lower than in countries where there is more equality. Let me once again state that correlation does not imply causation, so one has to keep that in mind when interpreting the results. The described theory in the theoretical framework is in line with the empirical data, but further research would be necessary to take a closer look at the underlying mechanisms. The role of trust in the solutions to sustainable development is not yet clear. There is a methodological gap that does not allow me to make a quantitative cross-country comparison about the role trust has in the existence and development of grassroots innovations and local initiatives.

5.1 Discussion

I am aware of the shortages and limitations this research has. I will reflect on them in this section and collaborate on how it remains an addition to the current academic debate around the topics of inequality and sustainability. I will end this section with a number of recommendations for further research.

First of all, I came to the conclusion that the first researched relation, concerning the consumption variable, is hard to investigate quantitatively on a global level. The relation between consumption and the corresponding footprint is clear: if we keep increasing our consumption, humanities footprint will grow further, posing a serious threat to sustainability. However, the role inequality has in this process can be more effectively researched with a different research method. Global data that allow cross-country comparisons, are too general and cannot indicate something about individual human behaviour. The level of development matters too much for both inequality and sustainability, to compare these two without taking that into consideration. It would be better to compare countries that are at a similar level of development, to eliminate that factor as a cause of variation. The level of research must be more local, so a regional of the community level, to be able to see the effect described in the theoretical framework. A series of case studies would be more suitable for this kind of research. In addition, I only looked at a few concepts and how they relate to each other, but it is important to notice that there probably are other

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25 concepts that influence the relations as well. That is why it is important to be careful when interpreting the results.

A second limitation is the fact that for some regions data are either unreliable or missing. This hampers the possibility to make a good country comparison. For example a lot of countries in the Middle East region, like Saudi Arabia, United Arab Emirates and Qatar, are missing a Gini score in the World Bank rankings, what leads to exclusion in this research. However, especially the Gulf states are estimated to have a very high inequality ratio, mainly due to the large majority of low-paid foreign workers (Alvaredo et al. 2018: 131-137). Interesting is however that a lot of these countries do have a high ecological footprint (Global Footprint Network 2018), for example Qatar has the highest ecological footprint per capita of the countries included in the scatterplot in figure 5. It makes these countries interesting subjects of research.

A third consideration is the use of indicators for the concepts of inequality and sustainability. There is an ongoing debate about the presuppositions about the Gini index and the ecological footprint, the indicators used for this research. First of all, the Gini index is difficult to interpret. It is not clear when a score is ‘low’ or ‘high’ and what it implies exactly. Secondly, the score does not say anything about the difference in distributions, that can vary a lot. Also, in line with the first named limitation, data used for calculating Gini scores are often unreliable or incorrect. This is mainly due to the fact that top incomes are estimated too low. (Alvaredo et al. 2018: 27-28) The use of the ecological footprint indicator has three disadvantages. First of all, the depletion of exhaustible resources is not included in the indicator. Only the use of renewable resources, biodiversity and waste and pollution are part of it. (Toye 2013: 7) Combining the latter three to one common measurement, the global hectare, leads to another disadvantage. The average productivity of a hectare is part of the calculation, implying that different sorts of natural capital are substitutable, so ignoring the difference in land types and their productivity. Lastly, the use of such an indicator on the national level forces countries to bring their use of natural resources in line with their biocapacity, ignoring differences in land and the possibilities of trade. (idem: 18) Important, also for this research, is that the ecological footprint concerns only natural sustainability, leaving aside the social aspects that come with this. The Carbon Footprint is the most accurate indicator of global warming at the moment, but it is also being discussed. It is linked to the average rise in global temperature, something that is being disagreed upon continuously during United Nations summits. (Toye 2013: 22) It shows how difficult it is to quantify such broad concepts and their relation. This research is an attempt to display this conclusion and offer some insights into how these concepts can be operationalized. It is a possible basis for further research into the subject.

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5.2 Recommendations

This thesis and the previous considerations lead to the following recommendations regarding further research:

❖ Regarding the consumption variable, further research must focus on the differences between countries, instead of making a cross-country comparison purely focussed on inequality. Countries differ in economic development, which influences both inequality and consumption patterns properly. It demands a more in depth and focussed research into the relation between the two concepts.

❖ For research into the relatively new solution approach to sustainable development, assigning a big role to communities and grassroots innovations, there is a pressing need to develop corresponding indicators and collect the relevant data. Researchers in this field must therefore keep an eye on developments in this area, or, with the time and means, developing it themselves.

❖ This research focuses on social inequality between groups and individuals. It would also be interesting to look at other forms of inequality, particularly inequality of power. The power-weighted-social-decision-rule (PWSDR) for example states that the ‘winners’ of economic activities are usually more harmful to the environment than the ‘losers’. It is because the rich consume and invest more. If these winners are in power, their preferences will influence national decision-making by policy biases, which lead to environmental degradation. (Islam 2015; Boyce 1994: 170)

❖ A specific recommendation for Milieudefensie is to keep delving into the scientific knowledge concerning social aspects of sustainability transitions. If a transition must gradually take place from a ‘green’ movement to a ‘social green’ movement, there are also other aspects that matter in this field. There must be a growing awareness about human capital, labour, communities, diversity and other social aspects of transitions that matter for people’s ability to participate in a more sustainable world.

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Social inequality and environmental sustainability : exploring their quantitative relation through the channels of consumption patterns and interpersonal trust