A secondhypothesis, which also works through the market but with the opposite result,might be called the market hypothesis. Under this idea, individuals who have ahigher level of income might afford to live in a more pristine or unpolluted location,whereas an individual who had lower willingness (or ability) to pay for alocation with lower pollution levels would end up in the more polluted locales. Hanna (2007) conducted ahedonic analysis of wages and housing values on emissions. She claims:
There are also good reasons to expectthat pollution levels are influenced by neighborhood incomes. If thewillingness to pay for a clean environment is increasing in income, incomegroups will be sorted into residential locations according to pollution levels,with the rich living in cleaner areas, ceteris paribus (Hanna, 2007,pp. 102–103).
Hanna finds astatistically significant and negative estimate of the relationship betweenpollution and non-wage income,“consistent with an endogenous sorting of income groups by pollution levels”(p. 111) (Contrary to the trade-off hypothesis, however, she finds no evidencethat pollution has an influence upon wage and salary incomes). Income sortingsuch as this would result in wealthy people living in less polluted areas,whereas poorer people would live in more polluted regions. Inequalities inincome and pollution would thus be additive. Although the result might appearunjust, some would argue that no injustice has taken place, as individuals aresimply expressing their preferences through the market ( Banzhaf, 2008).
A thirdhypothesis, resulting in the same pattern as the market hypothesis but leadingto a separate set of policy implications, is the environmental justicehypothesis, familiar to those conversant with the environmental justiceliterature. Under such a hypothesis, polluting facilities will tend to chooselocations based upon the likelihood (or lack thereof) of facing politicalopposition from residents. As poor (or low power) areas will tend to expressless political resistance, for various reasons, polluting firms will tend tolocate in low-income areas and/or regions with a large minority population. Wewould again expect inequalities in income and pollution to be additive, but thepolicy implications of such a distribution would call for government action (Hamilton,1995).