Can Pigou at the Polls Stop US Melting the Poles?

74 Pages Posted: 17 Jun 2019 Last revised: 30 Jul 2021

See all articles by Soren Anderson

Soren Anderson

Michigan State University - Department of Economics; Michigan State University - Department of Agricultural Economics; National Bureau of Economic Research

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER)

Boris Shor

University of Houston - Department of Political Science

Date Written: July 31, 2019

Abstract

Economists recommend Pigouvian taxes as the most efficient way to fight climate change. Yet, carbon taxes are difficult to implement politically. To understand why, we study Washington State's two failed carbon tax referendums from 2016 and 2018—the first such votes in the United States. We find that average voters' opposition to the carbon tax can partly be explained by the anticipation of higher energy costs. Meanwhile, ideology—as measured by voting on other initiatives—explains 90% of variation in voting across precincts. These results suggest that ideology plays a crucial role in driving opposition to carbon taxes. We find that revenue recycling interacts with ideology: conservatives preferred the 2016 revenue-neutral policy, while liberals preferred the 2018 green-spending policy. Finally, we forecast that no other state is liberal enough to pass Washington's policies. Thus, opinion surveys showing majority support for the carbon tax can be misleading.

Keywords: pigouvian taxes, carbon taxes, voting behavior, willingness to pay, state environmental policy

JEL Classification: D72, H23, H71, H72, Q52, Q54, Q58

Suggested Citation

Anderson, Soren T. and Marinescu, Ioana Elena and Shor, Boris, Can Pigou at the Polls Stop US Melting the Poles? (July 31, 2019). Available at SSRN: https://ssrn.com/abstract=3400772 or http://dx.doi.org/10.2139/ssrn.3400772

Soren T. Anderson

Michigan State University - Department of Economics ( email )

East Lansing, MI 48824
United States

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ioana Elena Marinescu (Contact Author)

University of Pennsylvania - School of Social Policy & Practice ( email )

3701 Locust Walk
Philadelphia, PA 19104-6214
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Boris Shor

University of Houston - Department of Political Science ( email )

Houston, TX 77204-3011
United States

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