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Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab

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Author Info

  • Kallbekken, Steffen
  • Kroll, Stephan
  • Cherry, Todd L.

Abstract

Tax-aversion reduces the likelihood that price rationing can be a politically viable tool for environmental protection. We examine the case of the classic Pigouvian tax to control a negative externality, and consider how recycling the revenues, labeling of the tax and information about its purpose affects the support for taxation. We test the support for taxation within a single-price market experiment, in which purchases by some buyers impose external costs on others. Observing behavior consistent with tax-aversion, we also find that recycling the revenues to more narrowly targeted groups seems to increase support for taxation. In the absence of narrow revenue recycling, labeling a Pigouvian instrument as a 'tax' may significantly lower the likelihood of voter support.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 62 (2011)
Issue (Month): 1 (July)
Pages: 53-64

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Handle: RePEc:eee:jeeman:v:62:y:2011:i:1:p:53-64

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Pigouvian tax Experiments Tax aversion Behavioral economics;

References

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Citations

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Cited by:
  1. Liverani, Andrea, 2009. "Climate change and individual behavior : considerations for policy," Policy Research Working Paper Series 5058, The World Bank.
  2. Galarraga, Ibon & Abadie, Luis M. & Ansuategi, Alberto, 2013. "Efficiency, effectiveness and implementation feasibility of energy efficiency rebates: The “Renove” plan in Spain," Energy Economics, Elsevier, vol. 40(S1), pages S98-S107.
  3. Fochmann, Martin & Kroll, Eike B., 2014. "The effects of rewards on tax compliance decisions," arqus Discussion Papers in Quantitative Tax Research 163, arqus - Arbeitskreis Quantitative Steuerlehre.
  4. Blaufus, Kay & Möhlmann, Axel, 2012. "Security returns and tax aversion bias: Behavioral responses to tax labels," arqus Discussion Papers in Quantitative Tax Research 133, arqus - Arbeitskreis Quantitative Steuerlehre.
  5. Sjak Smulders & Michael Toman & Cees Withagen, 2014. "Growth Theory and "Green Growth"," OxCarre Working Papers 135, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  6. David Heres & Steffen Kallbekken & Ibon Galarraga, 2013. "Understanding Public Support for Externality-Correcting Taxes and Subsidies: A Lab Experiment," Working Papers 2013-04, BC3.
  7. Tiezzi, Silvia & Xiao, Erte, 2013. "Time Delay and Support for Taxation," MPRA Paper 51233, University Library of Munich, Germany.
  8. Cludius, Johanna & Beznoska, Martin & Steiner, Viktor, 2012. "Distributional effects of the European Emissions Trading System and the role of revenue recycling: Empirical evidence from combined industry- and household-level data," Discussion Papers 2012/6, Free University Berlin, School of Business & Economics.
  9. Shogren, Jason F., 2012. "WAEA Keynote Address Behavioral Environmental Economics: Money Pumps & Nudges," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(3), December.
  10. Roeder, Kerstin & Habla, Wolfgang, 2012. "The Political Sustainability of Germany’s Environmental Tax Rate," Munich Reprints in Economics 19746, University of Munich, Department of Economics.
  11. Alpízar, Francisco & Martinsson, Peter & Nordén, Anna, 2014. "Do Entrance Fees Crowd Out Donations for Public Goods? Evidence from a Protected Area in Costa Rica," Discussion Papers dp-14-10-efd, Resources For the Future.
  12. Spencer, Thomas & Carole-Anne, Senit & Anna, Drutschinin, 2012. "The political economy of Australia’s climate change and clean energy legislation: lessons learned," MPRA Paper 43669, University Library of Munich, Germany.
  13. Ardjan Gazheli & Miklós Antal & Ben Drake & Tim Jackson & Sigrid Stagl & Jeroen van den Bergh & Manuel Wäckerle, 2013. "Policy responses by different agents/stakeholders in a transition: Integrating the Multi-level Perspective and behavioral economics," WWWforEurope Working Papers series 48, WWWforEurope.
  14. Cathrine Hagem & Bjart Holtsmark & Thomas Sterner, 2012. "Mechanism design for refunding emissions payment," Discussion Papers 705, Research Department of Statistics Norway.
  15. Martin Beznoska & Johanna Cludius & Viktor Steiner, 2012. "The Incidence of the European Union Emissions Trading System and the Role of Revenue Recycling: Empirical Evidence from Combined Industry- and Household-Level Data," Discussion Papers of DIW Berlin 1227, DIW Berlin, German Institute for Economic Research.
  16. Parsons, Oliver, 2012. "Community Governance: An Alternative Approach to Regulation and Market Mechanisms for Management of Nitrogen Loss," 2012 Conference, August 31, 2012, Nelson, New Zealand 136053, New Zealand Agricultural and Resource Economics Society.
  17. Martin Fochmann & Arne Kleinstück, 2012. "Steueraversion - Sind wir wirklich bereit auf Einkommen zu verzichten, nur um Steuern zu sparen?," FEMM Working Papers 120024, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.

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