Pollution tax heuristics: An empirical study of willingness to pay higher gasoline taxes
Economists widely agree that in concept, pollution taxes are the most cost-effective means of reducing pollution. With the advent of monitoring and enforcement technologies, the case for pollution taxation is generally getting stronger on the merits. Despite widespread agreement among economists, however, pollution taxes remain unpopular, especially in North America. Some oppose pollution taxes because of a suspicion that government would misspend the tax proceeds, while others oppose pollution taxes because they would impose economic hardships upon certain individuals, groups, or industries. And there is no pollution tax more pathologically hated as the gasoline tax. This is unfortunate from an economic perspective, as a gasoline tax is easy to implement, and is a reasonable Pigouvian tax, scaling proportionately with the harms of consumption. Surprisingly, there is a dearth of theory explaining this cleave between economists and virtually everybody else. Drawing on behavioralist literatures, this paper introduces several theories as to why people and governments so vehemently oppose pollution taxes. Using the example of gasoline taxes, we provide some empirical evidence for these theories. We also show that "revenue recycling," the use of tax proceeds to reduce other taxes, is an effective means of reducing opposition to gasoline taxes.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Poortinga, Wouter & Steg, Linda & Vlek, Charles & Wiersma, Gerwin, 2003. "Household preferences for energy-saving measures: A conjoint analysis," Journal of Economic Psychology, Elsevier, vol. 24(1), pages 49-64, February.
- James M. Poterba, 1991.
"Is the Gasoline Tax Regressive?,"
NBER Working Papers
3578, National Bureau of Economic Research, Inc.
- Fischel, William A., 1979. "Determinants of voting on environmental quality: A study of a New Hampshire pulp mill referendum," Journal of Environmental Economics and Management, Elsevier, vol. 6(2), pages 107-118, June.
- Beuermann, Christiane & Santarius, Tilman, 2006. "Ecological tax reform in Germany: handling two hot potatoes at the same time," Energy Policy, Elsevier, vol. 34(8), pages 917-929, May.
- Klok, Jacob & Larsen, Anders & Dahl, Anja & Hansen, Kirsten, 2006. "Ecological Tax Reform in Denmark: history and social acceptability," Energy Policy, Elsevier, vol. 34(8), pages 905-916, May.
- Krupnick, Alan & Harrington, Winston & Alberini, Anna, 1998.
"Overcoming Public Aversion to Congestion Pricing,"
dp-98-27, Resources For the Future.
- Harrington, Winston & Krupnick, Alan J. & Alberini, Anna, 2001. "Overcoming public aversion to congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(2), pages 87-105, February.
- Henrik Hammar, Asa Lofgren and Thomas Sterner, 2004. "Political Economy Obstacles to Fuel Taxation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
- Geertje Schuitema & Linda Steg & Charles Vlek & Talib Rothengatter, 2005. "Effects of revenue use and perceived effectiveness on acceptability of transport pricing policies," ERSA conference papers ersa05p719, European Regional Science Association.
- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, June.
- Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-47, March.
- Philippe Thalmann, 2004. "The Public Acceptance of Green Taxes: 2 Million Voters Express Their Opinion," Public Choice, Springer, vol. 119(1_2), pages 179-217, 04.
- Wachs, Martin, 2003. "A Dozen Reasons for Raising Gasoline Taxes," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt2000f8t0, Institute of Transportation Studies, UC Berkeley.
- Sarah E. West & Roberton C. Williams III, 2002.
"Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes,"
NBER Working Papers
9152, National Bureau of Economic Research, Inc.
- West, Sarah E. & Williams, R.C.Roberton III, 2004. "Estimates from a consumer demand system: implications for the incidence of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 535-558, May.
- Robert Hannay & Martin Wachs, 2007. "Factors influencing support for local transportation sales tax measures," Transportation, Springer, vol. 34(1), pages 17-35, January.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Krupnick, Alan & Harrington, Winston & Alberini, Anna, 2001. "Public support for pollution fee policies for motor vehicles with revenue recycling: survey results," Regional Science and Urban Economics, Elsevier, vol. 31(4), pages 505-522, July.
- Jakobsson, C. & Fujii, S. & Gärling, T., 2000. "Determinants of private car users' acceptance of road pricing," Transport Policy, Elsevier, vol. 7(2), pages 153-158, April.
- Deroubaix, Jose-Frederic & Leveque, Francois, 2006. "The rise and fall of French Ecological Tax Reform: social acceptability versus political feasibility in the energy tax implementation process," Energy Policy, Elsevier, vol. 34(8), pages 940-949, May.
- Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, March.
- Dresner, Simon & Jackson, Tim & Gilbert, Nigel, 2006. "History and social responses to environmental tax reform in the United Kingdom," Energy Policy, Elsevier, vol. 34(8), pages 930-939, May.
- Clinch, J. Peter & Dunne, Louise, 2006. "Environmental tax reform: an assessment of social responses in Ireland," Energy Policy, Elsevier, vol. 34(8), pages 950-959, May.
- Satoshi Fujii & Tommy Gärling & Cecilia Jakobsson & Rong-Chang Jou, 2004. "A cross-country study of fairness and infringement on freedom as determinants of car owners' acceptance of road pricing," Transportation, Springer, vol. 31(3), pages 285-295, August.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:36:y:2008:i:9:p:3612-3619. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.