Peer Effects in Public Support for Pigouvian Taxation
72 Pages Posted: 19 Dec 2018
Date Written: November 2, 2018
We examine how peer effects can impact public support for Pigouvian taxation in a market experiment with negative externalities. Our experimental data indicate that the support rate increases significantly when tax supporters are selected to communicate with voters. Nonetheless, left to their own devices, people are generally reluctant to communicate with and influence others. Among those who are willing, both tax supporters and objectors are equally likely to volunteer and are equally persuasive. As a result, the overall positive peer effect disappears. These findings offer an explanation for the continuing low public support for social-welfare enhancing tax policies.
Keywords: Market Experiment, Pigouvian Taxation, Negative Externality, Peer Effects,Vote
JEL Classification: D03, D62, D72, H23
Suggested Citation: Suggested Citation