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Tax or green nudge? An experimental analysis of pesticide policies in Germany
[A psychological study of the inverse relationship between perceived risk and perceived benefit]

Author

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  • Matthias Buchholz
  • Oliver Musshoff

Abstract

We use a business management game to investigate how a pesticide tax and a green nudge affect crop, tillage and pesticide decisions for a virtual farm. Results from German farmers reveal that both policies can reduce pesticide applications. The pesticide tax involves a substantial profit loss. Unlike in the green nudge scenario, participants under pesticide tax adjust their cropping and tillage strategies. We compare farmers’ decisions to those made by a mathematical programming model. Assuming profit maximisation would overestimate farmers’ response to the tax and underestimate the effectiveness of the nudge.

Suggested Citation

  • Matthias Buchholz & Oliver Musshoff, 2021. "Tax or green nudge? An experimental analysis of pesticide policies in Germany [A psychological study of the inverse relationship between perceived risk and perceived benefit]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(4), pages 940-982.
    • Handle: RePEc:oup:erevae:v:48:y:2021:i:4:p:940-982.
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    File URL: http://hdl.handle.net/10.1093/erae/jbab019
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    Cited by:

    1. Christoph Duden & Oliver Mußhoff & Frank Offermann, 2023. "Dealing with low‐probability shocks: The role of selected heuristics in farmers’ risk management decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 382-399, May.
    2. Lulu Tou & Jianhua Wang & May Chu, 2024. "From intention to action: Enabling sustainable agriculture in emerging economies through decentralized regulations for manure management," Public Administration & Development, Blackwell Publishing, vol. 44(5), pages 445-459, December.
    3. Michels, Marius & Luo, Hao & Weller von Ahlefeld, Paul Johann & Mußhoff, Oliver, 2023. "Compliance with pre-harvest interval rules in apple production—A comparative analysis of green nudges among fruit growers and agricultural students in Germany," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
    4. Finger, Robert & Möhring, Niklas, 2022. "The adoption of pesticide-free wheat production and farmers' perceptions of its environmental and health effects," Ecological Economics, Elsevier, vol. 198(C).
    5. Caffera, Marcelo & Chávez, Carlos & Lopez, Carolina & Murphy, James J & Briozzo, Juan, 2025. "The complementarity of low taxes and pro-social guidelines when polluters have moral preferences," MPRA Paper 125756, University Library of Munich, Germany.
    6. Jorge Andrés Tafur Gómez & Jhully Paulin Martínez Giraldo, 2024. "Students' perception of the application of nudges," Revista Tendencias, Universidad de Narino, vol. 25(2), pages 190-218.
    7. Ana Clara Borrego & Rute Abreu & Francisco Alegria Carreira & Filipe Caetano & Ana Lúcia Vasconcelos, 2023. "Environmental Taxation on the Agri-Food Sector and the Farm to Fork Strategy: The Portuguese Case," Sustainability, MDPI, vol. 15(16), pages 1-18, August.
    8. Finger, Robert & Sok, Jaap & Ahovi, Emmanuel & Akter, Sharmin & Bremmer, Johan & Dachbrodt-Saaydeh, Silke & de Lauwere, Carolien & Kreft, Cordelia & Kudsk, Per & Lambarraa-Lehnhardt, Fatima & McCallum, 2024. "Towards sustainable crop protection in agriculture: A framework for research and policy," Agricultural Systems, Elsevier, vol. 219(C).

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