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Pigouvian tax aversion and inequity aversion in the lab

Author

Listed:
  • 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.

Suggested Citation

  • Steffen Kallbekken & Stephan Kroll & Todd L Cherry, 2010. "Pigouvian tax aversion and inequity aversion in the lab," Economics Bulletin, AccessEcon, vol. 30(3), pages 1914-1921.
  • Handle: RePEc:ebl:ecbull:eb-10-00365
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I3-P174.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Olof Johansson-Stenman & James Konow, 2010. "Fair Air: Distributive Justice and Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(2), pages 147-166, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stefano Carattini & Andrea Baranzini & Philippe Thalmann & Frédéric Varone & Frank Vöhringer, 2017. "Green Taxes in a Post-Paris World: Are Millions of Nays Inevitable?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(1), pages 97-128, September.
    2. Tiezzi, Silvia & Verde, Stefano F., 2016. "Differential demand response to gasoline taxes and gasoline prices in the U.S," Resource and Energy Economics, Elsevier, vol. 44(C), pages 71-91.
    3. Tiezzi, Silvia & Xiao, Erte, 2016. "Time delay, complexity and support for taxation," Journal of Environmental Economics and Management, Elsevier, vol. 77(C), pages 117-141.
    4. 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.
    5. Tiezzi, Silvia & Xiao, Erte, 2013. "Time Delay and Support for Taxation," MPRA Paper 51233, University Library of Munich, Germany.
    6. Andrea Baranzini & Nicolas Borzykowski & Stefano Carattini, 2016. "Carbon offsets out of the woods? The acceptability of domestic vs. international reforestation programmes," GRI Working Papers 257, Grantham Research Institute on Climate Change and the Environment.
    7. Cherry, Todd L. & Kallbekken, Steffen & Kroll, Stephan, 2014. "The impact of trial runs on the acceptability of environmental taxes: Experimental evidence," Resource and Energy Economics, Elsevier, vol. 38(C), pages 84-95.
    8. David R. Heres & Steffen Kallbekken & Ibon Galarraga, 2017. "The Role of Budgetary Information in the Preference for Externality-Correcting Subsidies over Taxes: A Lab Experiment on Public Support," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(1), pages 1-15, January.

    More about this item

    Keywords

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

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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