Increasing the Acceptance of Energy Subsidy Reforms: A Cross-Country Survey Experiment in Latin America and the Caribbean

Abstract

Energy subsidies create a series of distortions that often have negative environmental and social consequences. Yet, since subsidies confer salient and tangible benefits in the form of cheaper prices, citizens are very resistant to reforms. This research investigates how to best communicate the removal of subsidies in order to increase the acceptance of energy reforms. We conducted a highly powered, preregistered study across 11 countries in Latin America and the Caribbean (N=6,824) assessing baseline knowledge and views about subsidies and testing several interventions. Our results show that citizens (a) display a generalized lack of knowledge about the existence of energy subsidies, (b) are very unwilling to remove these subsidies once they know of its existence, and (c) would like subsidies to actually increase rather than decrease. Despite these results, our experiment revealed that communication strategies can be tailored to increase the acceptance of energy reforms. Specifically, emphasizing the negative consequences of subsidies (e.g., overconsumption of natural resources) is more effective than highlighting the potential benefits to be obtained via its removal (e.g., higher investment in education). Further, providing complete information is more effective than offering summarized pieces of information. These findings provide guidance on how to effectively communicate energy reforms.

Keywords: Energy subsidies, sustainability, Sustainable development, Latin America, Experiment.