The impact of imaginary future generations on the preference for carbon tax schemes

Carbon pricing instruments have been found to be an effective incentive to mitigate climate change, but that surely increases the burden on the current generation. Some previous experiments found that people will have fewer or delayed gains after imagining the future. This research employed an experimental survey with a randomized treatment to investigate whether introducing imaginary future generations (IFGs) increases respondents’ probability of choosing carbon tax schemes. The survey was conducted at the end of 2021, collected 1,100 responses, with IFGs randomly introduced to half of the participants. Five carbon reduction schemes and their environmental, social, and economic consequences were presented to the respondents. These schemes include four hypothetical carbon tax schemes and a feed-in-tariff (FIT) scheme that is currently implemented in Taiwan as a comparator. Those carbon tax schemes can reduce carbon emissions by 50% from 2005 levels by 2050. This contrasts sharply with a no-tax scenario, which is projected to see emissions increase by 41%. The results showed that the carbon tax bundled with reduced VAT rates and lump-sum rebates was the most popular scheme, being the top choice for 35% of respondents. This appeal is likely attributable to its revenue recycling design, as well as its perceived superior social impacts compared to other schemes, which would increase the annual income of the lowest 20% income group by 7.5%. Moreover, the introduction of IFGs does significantly increase the probability by 11% that a respondent chooses the carbon tax scheme over the non-carbon tax scheme. The IFGs experience influences a broad demographic, including most respondents and wealthier individuals, rather than solely environmentalists, making them feel the social pressure of climate change concerns and be willing to mitigate it.