Inequality perceptions and preferences for carbon taxation

What is your research about?

The project aims to shed new light on why public support for carbon taxes is so low, despite the crucial role that many economists and environmental campaigners believe they could play in reducing greenhouse gas emissions and mitigating climate change. More specifically, we plan to explore whether the distributive implications of carbon taxes might act as a drag on support in times of high inequality. Carbon taxes are a tax on consumption and are therefore relatively regressive, putting a higher (relative) tax burden on households lower down the income distribution. Regressive taxes tend to be less popular with voters than progressive taxes. This provides one explanation for the low level of popular support for carbon taxes in contemporary advanced democracies.

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How will the Stone Centre grant help your research?

In order to test the effect of perceived inequality on support for carbon taxation, we will run a randomised, information provision survey experiment with representative samples from four OECD countries: the UK, Germany, Italy, and Norway. The Stone Centre grant will pay for the survey.

The participants will be recruited via the survey company Bilendi & respondi, who will also programme and host the survey. Respondents will take the survey online. The surveys in Italy and Norway (English and German are the native languages of the researchers on the project) will be translated by Bilendi & respondi and we will ask colleagues who are native speakers to check them for consistency and appropriate use of technical terms.

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What will you produce as part of your research?

We will publish a working paper and produce a related blog post or research summary for the Stone Centre website and other target outlets.

We could also produce CORE Econ education materials, for example:

• An interactive visualisation tool that draws on the data from our survey experiment. Students could explore how baseline preferences for carbon taxes vary across the countries and demographic groups in our sample, as well as how preferences are affected by different tax policy designs (using data from our control group). They could then see how shocks to inequality perceptions (i.e., our ‘treatments’) affect these preferences and whether that varies across different countries / demographic groups (using data from our treatment groups).
• A new ‘How economists learn from facts’ box that introduces students to online, randomised survey experiments as a tool economists use for studying individuals’ preferences (similar to Laboratory experiments in Unit 4 of The Economy 1.0) and then utilises our paper (and potentially others) as specific examples that can help bring the method to life for students.
• We could also contribute towards a CORE Insight on ‘Economic policies to tackle climate change’ (or a similar topic).
• A new Exercise for the textbook that draws on our research findings. This would nicely supplement Exercise 20.7 in The Economy 1.0, which asks students to think about the economic reasoning behind carbon taxes and carbon dividends, but only briefly touches on preferences/public support for these policies.

About this grant

Title of the project: Inequality perceptions and preferences for carbon taxation

Value of the grant: £23,350

Duration: September 2023 – ongoing

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