The Role of Budgetary Information in the Preference for Externality-Correcting Subsidies over Taxes: A Lab Experiment on Public Support
| Autor: | David R. Heres, Ibon Galarraga, Steffen Kallbekken |
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| Rok vydání: | 2015 |
| Předmět: |
Economics and Econometrics
Tax deferral Public economics 020209 energy Public policy Subsidy 02 engineering and technology Management Monitoring Policy and Law Preference Microeconomics Tax revenue Loss aversion 0202 electrical engineering electronic engineering information engineering Economics Revenue Externality |
| Zdroj: | Environmental and Resource Economics. 66:1-15 |
| ISSN: | 1573-1502 0924-6460 |
| DOI: | 10.1007/s10640-015-9929-6 |
| Popis: | The potential of taxes to correct environmental externalities has long been recognized among economists. Yet, this welfare-enhancing policy commonly faces strong opposition by citizens. Conversely, externality-correcting subsidies frequently enjoy high public support. We conduct a lab experiment to explore public support for Pigouvian taxes and subsidies. In an experimental market with a negative externality, participants vote on the introduction of Pigouvian taxes and subsidies under full or reduced information concerning how the tax revenues will be spent and the subsidy paid for. Theoretically the two instruments should produce identical outcomes. However, we find substantially greater support for subsidies than for taxes. This can partially be explained by the participants’ expectation that the subsidy will increase their own payoffs more than a tax, but not because it is expected to be more effective in changing behavior. Furthermore, we find that with greater uncertainty, the preference for subsidies is even stronger, a result which is consistent with loss aversion. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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