Does Paying to Pollute Make Pollution Seem Less Bad?

Abstract

A common critique of market-based instruments is that they commodify pollution and so reduce its moral stigma. If true, the increasing use of market-based instruments could reduce concern for the environment. With a preregistered and demographically representative experimental vignette study of over 2000 Americans, this project finds evidence against the anti-commodification critique. Participants randomly assigned to learn about market-based regulations of a fictitious new pollutant, malzene, did not find malzene pollution to be less morally problematic than those randomly assigned to learn about a mandate dictating pollution limits. The results were sufficiently precise to rule out any decrease in moral stigma from a pollution tax (as compared to a mandate), and to rule out a decrease larger than 4% from a cap-and-trade program. Market-based regulations can also make pollution look worse: Companies paying to pollute in compliance with market-based instruments looked morally worse than companies polluting in compliance with a mandate. This finding suggests a new and different argument against market-based regulations-that they reduce the reputational benefits of legal compliance. But market-based instruments do not appear to reduce the moral stigma of pollution.