Testing crucial model assumptions: the income/willingness to pay for the environment nexus in the Environmental Kutznetz Curve

Several theoretical models investigating the relationship between economic growth and environmental degradation postulate that consumers’ willingness to pay for it gets higher as far as per capita income grows. We test this hypothesis on willingness to pay (WTP) for the environment data collected from the World Value Survey database for a large number of countries and find strong support for it after controlling for demographics, personal values and country variables such as domestic institutional quality and pollution intensity. We also document that the additional and most robust determinants of the WTP are age, education, religious practice, proxies of civic values (tax morale, sense of belonging to a wider community) and quality of domestic institutions.