Carbon Taxes Crowd Out Climate Concern: Experimental Evidence from Sustainable Consumer Choices

Alice Pizzo, Christina Gravert, Jan M. Bauer, Lucia Reisch

Research output: Working paperResearch

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Abstract

We examine the impact of a carbon tax on consumer choices via a large-scale online randomized controlled trial. Higher taxes generally reduce the demand for high-carbon goods. Compared to an import tax, a carbon tax reduces demand when the tax is zero (i.e., announced but not levied) but shows relatively higher demand for high-carbon goods when a positive tax is introduced. This contradiction of basic price theory is entirely driven by climate-concerned consumers. Our findings suggest that carbon taxes can crowd out climate concerns, leading to important implications for policy.
Original languageEnglish
Place of PublicationKøbenhavn
PublisherDepartment of Economics. University of Copenhagen
Number of pages29
Publication statusPublished - Oct 2024
SeriesCEBI Working Paper Series
Number16/24

Keywords

  • Behavioral response
  • Carbon pricing
  • Climate change
  • Experiment
  • Moral licensing

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