Harnessing social information to improve public support for Pigouvian taxes

Pigouvian taxes are often unpopular among the general public. We test the effectiveness of social information provision to improve support for such taxes. In a lab experiment that involves a market game with externalities, we provide subjects with information about other participants’ personal opinions about the “right thing to do” (voting, or not, for tax implementation). To gain insight into the causal mechanism by which social information impacts subjects’ votes, we also elicit personal, normative, and positive beliefs. Our findings demonstrate a causal effect of social information provision on subjects’ support for the tax, and that subjects’ changes in beliefs is a causal mechanism through which this increased support for the tax is made possible. We also show that subjects who experience the tax are more likely to support it, and that the tax significantly reduces externalities in the game. We therefore highlight the pivotal role of beliefs in voting behaviors and the acceptability of Pigouvian taxes.