Supporting Carbon Taxes: The Role of Fairness

46 Pages Posted: 23 Nov 2020

See all articles by Stephan Sommer

Stephan Sommer

RWI - Leibniz-Institute for Economic Research

Linus Mattauch

University of Oxford

Michael Pahle

Potsdam Institute for Climate Impact Research (PIK)

Date Written: October 8, 2020

Abstract

We conduct a discrete choice experiment with a sample of 6,000 German household heads to examine how fairness preferences influence the support for carbon taxes and revenue-recycling options. While it is well-known that carbon taxes are effective in reducing emissions and can be made progressive, they remain fairly unpopular with German citizens. Consequently, best practice to build public support for them remains a relevant question for which there is no consensus. We obtain two major results: First, while green spending is more popular in general, it is significantly more popular among those who are pro-environment and trust the government. Second, when restricted to options for direct revenue redistribution, Germans prefer lump-sum payments over directing payments to the poorest or the most affected. Importantly, choices over these options depend both on genuinely different conceptions of fairness and respondents' economic circumstances. Our findings have implications for building support for effective climate change mitigation policies with those who are not yet convinced.

Keywords: carbon pricing, climate change mitigation, fairness, redistribution, environmental tax reform

JEL Classification: A13, H23, Q54

Suggested Citation

Sommer, Stephan and Mattauch, Linus and Pahle, Michael, Supporting Carbon Taxes: The Role of Fairness (October 8, 2020). Available at SSRN: https://ssrn.com/abstract=3707644 or http://dx.doi.org/10.2139/ssrn.3707644

Stephan Sommer (Contact Author)

RWI - Leibniz-Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Linus Mattauch

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Michael Pahle

Potsdam Institute for Climate Impact Research (PIK) ( email )

Telegrafenberg 31
Potsdam, Brandenburg 14473
Germany

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