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Pigouvian tax aversion and inequity aversion in the lab

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Author Info

  • Steffen Kallbekken

    ()
    (CICERO Center for International Climate and Environmental Research - Oslo)

  • Stephan Kroll

    ()
    (Department of Agricultural and Resource Economics, Colorado State University)

  • Todd L Cherry

    ()
    (Department of Economics, Appalachian State University)

Abstract

We use an experimental market with externalities to test whether inequality aversion could help explain the popularity of earmarking tax revenues. We find that voter opposition is not fully explained by material self-interest: Results indicate that preferences for fairness influence voting behavior, with greater inequality in tax revenue distribution negatively affecting the acceptability of the tax. In addition to this, we also discover a significant degree of tax-aversion in the votes. Our findings provide greater understanding of the behavioral underpinnings of the positive impact that earmarking has on the acceptability of Pigouvian taxes.

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File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I3-P174.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 30 (2010)
Issue (Month): 3 ()
Pages: 1914-1921

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Handle: RePEc:ebl:ecbull:eb-10-00365

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Related research

Keywords: Pigouvian taxes; public acceptability; earmarking; fairness; inequity aversion; laboratory experiments;

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  1. Olof Johansson-Stenman & James Konow, 2010. "Fair Air: Distributive Justice and Environmental Economics," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(2), pages 147-166, June.
  2. Kallbekken, Steffen & Aasen, Marianne, 2010. "The demand for earmarking: Results from a focus group study," Ecological Economics, Elsevier, vol. 69(11), pages 2183-2190, September.
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Cited by:
  1. Kallbekken, Steffen & Kroll, Stephan & Cherry, Todd L., 2011. "Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 53-64, July.
  2. Tiezzi, Silvia & Xiao, Erte, 2013. "Time Delay and Support for Taxation," MPRA Paper 51233, University Library of Munich, Germany.

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