In this episode, Ramanan speaks with Kevin Ummel, a research affiliate at the Population Studies Center at the University of Pennsylvania.
Ummel is a leading expert in measuring household-level environmental impacts and the author of the most recent household impact study for the Citizens' Climate Lobby concerning the financial and political effects of a very hot topic, a redistributive carbon tax.
Kevin collaborates with academics and with NGOs and occasionally with for-profit types like myself on questions at the intersection of environmental economics and data science, including neighborhood-level mapping of carbon footprint, social inequality and modeling of policy impacts. He worked previously at the International Institute for Applied Systems Analysis in Austria and The Center for Global Development in Washington, DC.
They discuss carbon payments, frugality and sustainability, and effective strategies for reducing consumption. Time stamps and the full transcript are below. This episode is also available on Apple Podcasts and Spotify.
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[00:00:14] Ramanan Raghavendran: Hello everybody. We're continuing our climate scientists, climate researcher interview series. And I'm super excited today to speak with Kevin Ummel. Kevin is a research affiliate at the Population Studies Center at the University of Pennsylvania, my alma mater. He is a leading expert in measuring household-level environmental impacts, and author of the most recent household impact study for the Citizens' Climate Lobby concerning the financial and political effects of a very hot topic, a redistributive carbon tax. Kevin collaborates with academics and with NGOs and occasionally with for-profit types like myself on questions at the intersection of environmental economics and data science, including neighborhood-level mapping of carbon footprint, social inequality and modeling of policy impacts. He worked previously at the International Institute for Applied Systems Analysis in Austria and The Center for Global Development in Washington, DC.
He now lives in Colorado with his wife and son. He and his wife, Sarah, author the blog Just Frugality, which I would really urge everyone watching this to visit. It's begun to have an effect on me and there they discuss the value of intentional consumption and how they have constructed a semi-retired lifestyle in their mid-thirties. I'm especially excited because we've had a series of these interviews over the last 12 months. And I think with this conversation with Kevin, we're really beginning to pivot more firmly towards concepts of behavior change.
So I'm going to kick it off, Kevin.
[00:01:44] Question number one is, one of my goals in these short interviews is to humanize science. And so can you walk us through your life and career? What led you to make the career choices that you have?
[00:01:56] Kevin Ummel: Sure. Well, I was born and raised in the Bay Area and went to Foothill Community College and transferred to Stanford where I studied public policy, really focused on development economics and global poverty there, why are some societies rich and some poor? After I graduated, moved to DC to work for The Center for Global Development, one of those quirks of fate. The Center had recently hired a former world bank economist named David Wheeler, who became a mentor to me and really a champion of mine. And so I worked with him for about three years on modeling renewable energy deployment in developing countries and renewable energy policy. And at that point, I thought I wanted to be an academic. I actually applied to do a PhD at Stanford and I was summarily and completely justifiably rejected. And around the same time, my girlfriend broke up with me and I decided I need to make a change here.
So I quit my job and sold all my possessions and got a 30-liter backpack and had I headed off to Asia. And I came back about seven months later with a couple of tattoos and tuberculosis, inactive tuberculosis. And really just at that point, I had a conviction that I wanted to live a different and simpler life. I knew I didn't need much. And I had realized that I really valued freedom more than anything else. I knew that environmental sustainability was going to be part of that life path. I didn't quite know how, and I was offered a scholarship to go over to Europe, to do a master’s in environmental science. And at about the same time, that girlfriend that I mentioned decided she'd made a horrible mistake. And she's now my wife, Sarah.
[00:03:20] Ramanan Raghavendran: Happy ending.
[00:03:23] Kevin Ummel: Yes. So I came back to the US, we got married. We moved to Colorado in 2012, and then I had an opportunity to go to the International Institute for Applied Systems Analysis in Austria for two years. Worked on a very interesting project there to quantify the energy and material inputs needed to ensure decent living standards in developing countries. And then we came back to the US. We had our son, and for the last few years, I've been collaborating with NGOs and the University of Pennsylvania, mostly on household carbon footprinting in the US with the goal of informing environmental policy design. And on the personal front, as you mentioned, my wife and I have spent that decade that we've been married really intentionally developing a lifestyle and a philosophy of life that we think delivers a really high level of wellbeing for our family and comparatively low level of consumption. And we've tried to make that journey public as much as we can.
[00:04:25] Kevin Ummel: And I guess just overall, I'm fascinated by the challenge of how to construct a fulfilling life that doesn't break the bank either financially or ecologically. And I'm interested in the material aspects of that, but also the psychological and philosophical side of the equation as well.
[00:04:40] Ramanan Raghavendran: I rarely, in fact, I don't think I've ever asked this question as a follow-up to my standard first question, which is the one I just asked. And it is, I think one of the stress levels that people have is, okay, we can do this in the here and now, but could we actually pull this off for the next 35 years? And so as you think about the changes you've made and the shifts you've made, is there a stress and anxiety about the future? Can this be sustained?
[00:05:11] Kevin Ummel: You mean in terms of our personal choices?
[00:05:13] Ramanan Raghavendran: Yes.
[00:05:14] Kevin Ummel: Well, in our case, no, because we spend so little money that the savings trajectory for us probably looks much better frankly, than a lot of people who make way, way more money. So we have no stress about the future.
[00:05:33] Ramanan Raghavendran: Okay. Well you may find a whole bunch of my viewers and me just showing up to live with you, but we'll get to that. We'll get to that in due course. I want to move on to the next question, starting into some of your research, if that's okay. You're an environmental economist, as you mentioned, but you're also a population scientist. So can you shed some light on the small area analysis work that you've done with Penn?
[00:05:58] How does household and neighborhood level analysis provide better superior insights to macro-scale observations, especially when we think about inequalities, systemic or otherwise in how climate change affects human beings?
[00:06:17] Kevin Ummel: Yeah. Well, I mean, first a general comment about the data that social scientists have at their disposal. There's a ton of information out there on how households and individuals behave and think, and this is usually collected in surveys about how people get their income, how they spend it, how they use their time, how they use technology, their political preferences and policy views and all that. And then next to that, there's this ever-increasing trove of spatially referenced data and things about what does the building stock look like from place to place, commute distances, school quality, and election outcomes. It's endless, but these are all sitting in their separate silos, are generally not used in any kind of coherent way. So my general aim as primarily a data scientist and secondarily a social scientist is to develop statistical techniques to combine these disparate data sources that are out there and aren't being fully utilized.
And in the context of climate change, this is really quite relevant because of the rising importance of environmental justice. This general concern is that efforts to address one problem, climate change, will actually exacerbate other problems, particularly social inequalities. And the Biden Administration is really taking this seriously and directing federal agencies to take it seriously. The problem is that there's comparatively little research on how environmental policies or really even general government policies impact different types of households in different places. Part of that is that the high-resolution data that you need to do that type of analysis just hasn't existed, or it doesn't exist in sufficient quantity.
So to give you one example, most economists believe that carbon taxes are the most efficient way to reduce emissions. And the reason they're efficient is that they increase the price of carbon-intensive goods and services. For example, gasoline. Well, that's not a big deal for you or me, but for a household that's near the poverty line, it's a big deal. But interestingly, and I think this is the type of detail that you need good high-resolution data to get at. You can take equally poor households, one that lives in New York City and uses public transportation, one that lives in the suburbs of Dallas and has an old fuel-inefficient car and a 45-minute commute. We have a big equity problem there.
So if you don't have the data to understand those differentiations across space and socioeconomic groups, you can't tailor your data to address environmental concerns or you might do it in a way that is terribly ineffective. So in addition, outside of climate, I'm interested in developing these types of cohesive universal datasets, because I think there's lots of applications to all sorts of interesting questions. For example, housing policy, housing subsidy policy, political redistricting, questions around what are called neighborhood effects. So for example, we know that rich households are increasingly self-sorting into neighborhoods that are exclusively other high-income households. And what is the effect of that kind of peer group effect on notions of enough for sufficiency and does it change their consumption patterns? So there's all sorts of interesting applications, but my focus primarily as a data scientist is developing the kind of high-resolution data that you need to even begin to get at those questions.
[00:09:31] Ramanan Raghavendran: Got it. So I'm going to continue digging and poking and it relates to carbon again. All these questions are based on some of your work. So much research has examined global or national carbon emissions. And as you were just saying, these are not silver bullet and should not be silver bullet things. The effects of climate change are not distributed equally as we just discussed. And so your research at the intersection of all of these trends and factors is especially relevant. So can we unpack a little bit further whether carbon payments...
[00:10:10] We just touched on whether carbon payments counterbalance these inequalities. Can we dig into that a little further?
Could we make the case that it's misguided? Is that the direction, maybe, which would be counter to a lot of economic thinking.
[00:10:26] Kevin Ummel: Yeah. To my feeling on carbon taxes specifically, let's take the case of what's called carbon tax and dividend policy, because this is the type of policy that I've analyzed in quite a bit of detail for the Citizens' Climate Lobby. So there's actually a proposal in Congress right now, unclear whether it will go anywhere, but it's a proposal to have a national carbon tax and return 100% of the revenue back to households as a roughly per capita dividend. So every month households would get a check from the government, which is their share of the carbon tax proceeds.
So to give you an idea, carbon tax increases prices. I think it's useful for a general audience to understand what we're talking about.
[00:11:12] Ramanan Raghavendran: Please, absolutely.
[00:11:14] Kevin Ummel: So a carbon tax of $30 per ton, we're talking about increasing gasoline prices by about 30 cents. A gallon of milk increases by maybe 4 cents and a new car might increase by $200. That gives you an idea of the scale. So as we talked about earlier, we had these equity concerns. So what Citizens' Climate Lobby asked me to do was develop a data set of household footprints across America. We ended up getting assembling a data set with 1.3 million households, and then simulating how this policy actually plays out financially for each of those households. So what's the additional cost of the policy due to rising prices, and then how is the dividend offsetting that additional cost?
The general result is that a per capita dividend tends to be very progressive. So about 60% of all households come out basically ahead in the sense of the dividend more or less entirely covers the additional cost. For households in poverty, it goes up to about 90%. So you're addressing most of the concerns about general concerns about the poor getting squeezed by environmental policy. But there's really important geographic variation that national level models or previous studies have missed I think. So for example, richer, coastal blue states tend to do better than poorer red states in the middle of the country.
That's largely driven by differences in climate, population density, carbon intensity, electricity supply. There's also concerns, I think a per capita dividend addresses most of the concerns at the very bottom of the income distribution, but I think there are additional concerns towards the middle of the distribution. So if you take households with more or less middle-class median incomes, and you look at households in California, they do great under that policy. Households in Minnesota do significantly worse. Households in North Dakota even worse still. And they have basically the same income. So it's not clear if that's fair, it's not clear if that's politically tenable, and even if you looked within states, you would find differences again, controlling for income, you would find differences between, say San Francisco and Fresno. Again, for these spatial factors.
You also get interesting effects like Latino households and Black households tend to be on, in terms of socioeconomic status, roughly similar. Because Latino households are larger, which is more efficient from a carbon standpoint, Latino households do quite a bit better than Black households under a per capita dividends. So there's all these complications to the question of is the policy fair, in some sense. And I'm a data head, so I could imagine ways of designing a rebate mechanism where you give money back to households in ways that is a little bit more targeted and addresses some of these concerns with finer detail. And you might even do it in a way that brings Republicans along just in terms of real politics, but that would require moving away from the simplicity of a per capita dividend. And it appears from my interactions with policymakers and staff on the Hill is that simplicity is something that they really value in policy proposals.
[00:14:35] Ramanan Raghavendran: They do. There's tremendous value to simplicity, but simplicity is one reason why we repeatedly find ourselves in a ditch. This is a rabbit hole. It's a follow-up question and I almost don't want to ask it, but I'm going to ask it, which is, part of the issue around why there is simplicity is the desire to create a single nationally mandated policy. Is there any virtue to pushing this down to states making their own decisions? Or is that just dumb?
[00:15:05] Kevin Ummel: That's an interesting idea. I concede allowing states to decide how they want to allocate their revenue or allocate their share of the rebate. Maybe California wants to have a very highly targeted rebate program and maybe another state just wants to do per capita. It's very hard to do state-based carbon taxes just because of leakage. Companies move, goods are flying all over the place. I agree with the simplicity. Was it Einstein who said the solution to any problem should be as simple as possible and no more so. I think that's where we should be thinking and maybe per capita is too simple.
[00:15:43] Ramanan Raghavendran: Yeah. And simplicity is great when you're dealing with a special theory of relativity. I'm all for simplicity, but this is a little different. I'm going to push us on, even though we could spend a lot of time on this super interesting topic, but we have more interesting topics or equally interesting topics. So your household impact survey notes that households in the richest 20% account for about 2.6 times as much carbon pollution as one of the poorest 20%. And I'm sure that multiple is even more staggering if we were to look at the top 1% or 5%. and largely because they travel more, they spend a lot more on goods and services. You mentioned as we started, and here is the chance to dig into it a little better, your wife and you have laid out on Just Frugality, you've laid out a roadmap. This is what you're doing and how you're doing it.
[00:16:37] So what do you think is the relationship between frugality and household-level sustainability?
And that is a very open-ended question by design, because you can take it anywhere you want.
[00:16:51] Kevin Ummel: So when I think of the relationship between frugality and sustainability, I immediately think of happiness or well-being as being the key mediating concept there. So let me just describe what frugality means to us. So for us, frugality means something like the efficient use of resources to maximize well-being. That's really all it means. Principally that means maximizing our use of money, but especially time, which is really the only scarce resource really is time. And so if you take that seriously, I think it leads you in a certain direction in terms of consumption choices. But there is a literature, there is research out there on the relationship between consumption or at least income and emotional well-being, notions of happiness. It tends to find that, yeah, as you might expect, it appears that self-reported happiness tends to saturate at a certain income level.
The research so far is there's lots of problems with it, but it's suggesting that saturation levels in the United States and other rich countries are quite high. And as we're talking individual income of around maybe $80,000. Now that's around the 80th or maybe 75th percentile of the US income distribution. And it clearly suggests that there is a fair amount of consumption going on in rich countries that is in some sense low quality, by which I mean that it's just not generating a lot of returns in terms of wellbeing. So I think one way to think about frugality is that it's not that we want to become misers. It's not that we are anti-consumption. It's that we just want to eliminate the low-quality consumption. And we really want to focus on high-quality stuff. And because even the low-quality consumption up at high income levels is coming with an environmental cost, coming with an impact.
So I think that reshaping social norms around low-quality consumption at the top of the income distribution strikes me as extremely important for two reasons. One is just a practical impact reason, which is that there's, as you pointed out, the emissions at the top of the distribution are quite large. There's a lot of fat there that's not delivering much in terms of wellbeing probably. And the other reason is that what the say the top 20% of the income distribution does in terms of their consumption norms is all about defining aspirations for the rest of our society, but also for the world. And so I think that households in the upper middle class in particular in rich countries that are able to find a way of living with comparatively less, not in an absolute sense, is it little, I think there's a responsibility there to try and share that and to try and make the case, particularly to peers about the ability to live a very good life on less.
And we've tried to do that with our website and to give people a little more context. We're in our mid-thirties, we have a child, a dog, a mortgage. At this point, we each work 20 hours a week. Total household income is about $70,000. So we're only taking on work that we really want to do and we don't particularly care how much we get paid. We give away in charity or save about 40,000 of that and the rest finances a lifestyle that we consider to be very, very high quality. Outside of our housing costs, we're spending about $22,000 a year. And I think the hardest thing for people to understand when I say that is that we're not weirdos. If you came and spent a day with us, we would have a lovely time.
[00:20:20] Ramanan Raghavendran: It is very clear that you're not a weirdo. And so now I need to ask you a follow-up question, then we'll move to question five. Follow-up question Kevin is, have you begun having an impact on your friends? Forget people like me who come to the website. But just in your peer group of folks who know you, are you seeing behavior change?
[00:20:46] Kevin Ummel: I think at the margins. I think part of the problem that I've run into is that we've, again, in a global context, I don't think what we're doing is extremely at all. It's only extreme relative to our peer group. But to the peer group, it looks pretty extreme, particularly the dollar amounts. And so when you see something that's extreme, there's a certain sense of just discount it entirely. So what I have found is most effective is talking to people about specific actions, to specific choices, choices about vehicles or choices about food.
[00:21:20] Ramanan Raghavendran: That is my next question.
[00:21:23] Kevin Ummel: Okay, great.
[00:21:25] Ramanan Raghavendran: Because we're going to get to that. And so you can continue your response in the context of the next question. And the next question, it's our last question, but it's a really important one. So as consumers we're bombarded with green or green washed most of the time, alternatives to products we use in everyday life. As a single individual, I have been getting a lot of hot on this topic and beginning a newsletter on replacing products, but you've pointed out very eloquently that people are very focused on individual product selection rather than one's overall environmental footprint. And this is something, in part because of your writing, I have begun thinking about a lot as well.
[00:22:10] So in your eyes, what is the most effective way that households can reduce their environmental footprint and avoid the drug of greenwashed consumption and using products?
[00:22:24] Kevin Ummel: Okay. I get asked a version of this question a lot, so you'd think I would have a real practiced answer. So I think there's two ways of answering this. I think of one is a shallow answer and one I consider the deep answer. So the shallow answer is that there's probably some basic lifestyle parameters that if one keeps them in view and tries to orient their consumption around them, have the biggest impact. So the five that I think out of that that I list for people are the size of your home. Literally the physical size of your home, the nature of your commute to or from work, if that's really high footprint, that's going to add up. Avoid meat. This isn't a prohibition, reduce consumption, especially beef. Avoid airplanes, simpler thing, not a prohibition, but we want to use them consciously. And then the fifth one I would say is just don't buy things you don't need. And for things you do need to think about buying used versions of them first and foremost.
And so you'll notice that what's not on the list, as you mentioned, is swapping out a non-green product for a green product. And the reason I say that is I just don't have faith, at least today, that customers or consumers can really differentiate or have the ability to really differentiate between a genuinely green product and a fake one. And I hope that that changes. But for now my feeling is that a dollar spent on a green product might reduce your footprint, but the dollar you don't spend we know reduces your footprint.
[00:23:54] Ramanan Raghavendran: This series is not about, despite the fact that I for the first time, I've got a virtual background with my firm's name on it. The series has never been about really Amasia, but as you may or may not have seen my own writing, I keep coming... In my world of venture capital, technology, clean tech, climate tech, sustainability tech, this, that, and the other, there's just a widespread view that we can engineer or tech our way out of the crisis. And for me, our investment thesis is built around the idea that we cannot, and we need to engage in behavior change. And a lot of that is just reducing consumption. Your notion of rather than swapping a dollar for another dollar, one product for another, you're better off not spending that dollar at all.
Well, listen, each one of our topics, I feel like we could spend two hours on, but this is to give people a sense for your research, your wisdom, your choices. I want to thank you for taking the time. And I have a very strong feeling I'm going to be asking you to do this again to double-click on one or two of these things. So Kevin, thank you.
[00:25:09] Kevin Ummel: Happy to. Yeah. Thank you Ramanan, that was great fun, great questions and let me know if I can help in any other way.
[00:25:14] Ramanan Raghavendran: Thank you.