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The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden

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  • Sverker C. Jagers
  • Johan Martinsson
  • Simon Matti

Abstract

This study aims at better understanding how, and to what extent, perceptions of a policy instrument’s distributional effects impact on policy support, focusing on the case of CO2 taxes on petrol in Sweden. Through a large-scale (N = 5000) randomized survey experiment with a 2 × 3 factorial design, the extent to which perceptions of fairness determine attitudes to a suggested increase of the Swedish CO2 tax is explored. Furthermore, the study considers whether these effects change with the level of the suggested tax increase, as well as whether negative sentiments can be alleviated by combining it with a compensatory measure in the shape of a simultaneous income tax cut financed by the revenues from the tax increase. The results show that a higher tax increase is both viewed as more unfair and enjoys weaker support. Furthermore, compensatory measures can be a powerful policy design tool to increase perceptions of the policy as fair, but the effect of compensation on policy support is conditioned by the individual’s left–right ideological position. Whereas people self-identifying to the right react favourably to compensatory measures, people self-identifying to the left become less supportive of a tax increase when combined with a simultaneous cut in income taxes.Key policy insights Perceptions of fairness are highly important for explaining public support for climate policy tools, specifically CO2 taxes.Compensatory measures can be a powerful policy design tool to increase perceptions of the policy as less unfair.However, the effect of compensatory measures on policy support is conditioned by ideological position, and only successful among people to the ideological right.In contexts dominated by right-wing ideals, a combination of a tax and a compensatory scheme may be a successful route forward towards increased climate policy support.In left-oriented contexts the results imply that a CO2 tax without compensation seems more likely to increase support.

Suggested Citation

  • Sverker C. Jagers & Johan Martinsson & Simon Matti, 2019. "The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden," Climate Policy, Taylor & Francis Journals, vol. 19(2), pages 147-160, February.
    • Handle: RePEc:taf:tcpoxx:v:19:y:2019:i:2:p:147-160
    DOI: 10.1080/14693062.2018.1470963
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    Citations

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    Cited by:

    1. Kruse, Tobias & Atkinson, Giles, 2022. "Understanding public support for international climate adaptation payments: Evidence from a choice experiment," Ecological Economics, Elsevier, vol. 194(C).
    2. Yoon, Yeochang, 2023. "Improving social acceptance for carbon taxation in South Korea," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(2), pages 1-20.
    3. Andrea Amado & Koji Kotani & Makoto Kakinaka & Shunsuke Managi, 2023. "Carbon tax for cleaner-energy transition: A vignette experiment in Japan," Working Papers SDES-2023-6, Kochi University of Technology, School of Economics and Management, revised Oct 2023.
    4. Sebastian Levi & Christian Flachsland & Michael Jakob, 2020. "Political Economy Determinants of Carbon Pricing," Global Environmental Politics, MIT Press, vol. 20(2), pages 128-156, May.
    5. McLaughlin, Craig & Elamer, Ahmed A. & Glen, Thomas & AlHares, Aws & Gaber, Hazem Rasheed, 2019. "Accounting society's acceptability of carbon taxes: Expectations and reality," Energy Policy, Elsevier, vol. 131(C), pages 302-311.
    6. Sara Maestre-Andrés & Stefan Drews & Ivan Savin & Jeroen Bergh, 2021. "Carbon tax acceptability with information provision and mixed revenue uses," Nature Communications, Nature, vol. 12(1), pages 1-10, December.
    7. Tovar Reaños, Miguel A. & Lynch, Muireann Á., 2022. "Measuring carbon tax incidence using a fully flexible demand system. Vertical and horizontal effects using Irish data," Energy Policy, Elsevier, vol. 160(C).
    8. Liam F. Beiser-McGrath & Thomas Bernauer & Jaehyun Song & Azusa Uji, 2021. "Understanding public support for domestic contributions to global collective goods," Climatic Change, Springer, vol. 166(3), pages 1-20, June.
    9. Mireille Chiroleu-Assouline, 2022. "Rendre acceptable la nécessaire taxation du carbone. Quelles pistes pour la France ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 15-53.
    10. Gabriella De Sario & Giovanni Marin & Agnese Sacchi, 2023. "Citizens' attitudes towards climate mitigation policies: The role of occupational exposure in EU countries," Kyklos, Wiley Blackwell, vol. 76(2), pages 255-280, May.
    11. Kanberger, Elke D. & Ziegler, Andreas, 2023. "On the preferences for an environmentally friendly and fair energy transition: A stated choice experiment for Germany," Energy Policy, Elsevier, vol. 182(C).
    12. Thomas Sterner & Richard T. Carson & E. Somanathan & Dale Whittington & Jorge Bonilla & Haileselassie et al. Medhin, 2020. "Funding Inclusive Green Transition through Greenhouse Gas Pricing," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(01), pages 03-08, April.
    13. Sverker C. Jagers & Erick Lachapelle & Johan Martinsson & Simon Matti, 2021. "Bridging the ideological gap? How fairness perceptions mediate the effect of revenue recycling on public support for carbon taxes in the United States, Canada and Germany," Review of Policy Research, Policy Studies Organization, vol. 38(5), pages 529-554, September.
    14. Svetlana Gercheva, 2021. "Recycling of Carbon Revenues in Bulgaria," Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Union of Scientists - Varna, Economic Sciences Section, vol. 10(3), pages 54-62, December.
    15. Beiser-McGrath, Liam & Busemeyer, Marius R., 2023. "Carbon inequality and support for carbon taxation," LSE Research Online Documents on Economics 120925, London School of Economics and Political Science, LSE Library.
    16. Kruse, Tobias & Atkinson, Giles, 2022. "Understanding public support for international climate adaptation payments: evidence from a choice experiment," LSE Research Online Documents on Economics 112963, London School of Economics and Political Science, LSE Library.
    17. Jakub Sokołowski & Piotr Lewandowski & Jan Frankowski, 2023. "How to Prevent Yellow Vests? Evaluating Preferences for a Carbon Tax with a Discrete Choice Experiment," IBS Working Papers 03/2023, Instytut Badan Strukturalnych.

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