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Preferences for distributional impacts of climate policy

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  • Lea Skræp Svenningsen

    (Department of Food and Resource Economics, University of Copenhagen)

  • Bo Jellesmark Thorsen

    (Department of Food and Resource Economics, University of Copenhagen)

Abstract

What role do people think distributional aspects should play in design of climate policy? The literature assessing climate policies has shown that assumptions regarding peoples’ distributional preferences for climate change policy impacts are central for policy assessment, but empirical evidence for such preferences is lacking. We design a discrete choice experiment that varies how climate policies affect the income of people living in the future in three geographical regions. The experiment is implemented on a representative sample of the Danish population and preferences are modelled in a latent class model. Our results show that i) a small majority of Danes expresses preferences for climate policies consistent with inequity aversion, ii) a group expresses preferences resembling simple warm glow, while iii) a small group prefers not to support additional climate policies. Finally a somewhat larger group expresses some form of distributional preferences, but shows positive preferences for costs, suggesting that responses could be influenced by strategic behaviour and over-signalling of commitment. Our results provide support for the inclusion of social preferences regarding distributional effects of climate change policies in policy assessments, and hence for the significant impact on policy this inclusion have.

Suggested Citation

  • Lea Skræp Svenningsen & Bo Jellesmark Thorsen, 2017. "Preferences for distributional impacts of climate policy," IFRO Working Paper 2017/10, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:wpaper:2017_10
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    2. Yu-Hsuan Lin, 2018. "How social preferences influence the stability of a climate coalition," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(2), pages 151-166.
    3. Alberto Gago & Xavier Labandeira & José M. Labeaga & Xiral López Otero, 2021. "Transport Taxes and Decarbonization in Spain: Distributional Impacts and Compensation," Hacienda Pública Española / Review of Public Economics, IEF, vol. 238(3), pages 101-136, September.
    4. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
    5. Sommer, Stephan & Mattauch, Linus & Pahle, Michael, 2022. "Supporting carbon taxes: The role of fairness," Ecological Economics, Elsevier, vol. 195(C).
    6. Svenningsen, Lea S. & Jacobsen, Jette Bredahl, 2018. "Testing the effect of changes in elicitation format, payment vehicle and bid range on the hypothetical bias for moral goods," Journal of choice modelling, Elsevier, vol. 29(C), pages 17-32.

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    More about this item

    Keywords

    choice experiment; social preferences; inequity aversion; warm glow; altruism; climate change impacts; latent class; social cost of carbon;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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