Who supports carbon pricing? Older adults’ financial literacy and attitudes toward carbon taxation

We investigate how financial literacy impacts older adults’ views on carbon taxation and climate fiscal policies. Using a representative survey in Singapore, we find that financially savvy older adults are generally less supportive of climate fiscal policies in that they are less likely to perceive carbon tax as fair or believe that increasing carbon tax will help increase employment. We provide empirical evidence that these relationships are causal. Interestingly also, the negative causal effect of financial knowledge on older adults’ attitudes towards carbon taxes is predominantly driven by their inflation literacy. Those more knowledgeable about inflation have higher awareness that carbon pricing can lead to higher costs of production and costs of living. Other personal factors that shape older adult’s attitudes on carbon taxation include age, marital status, and income. As future cohorts of elderly become more financially literate, communication campaigns on climate change and carbon taxation directed towards older demographic groups are urgently warranted.