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Accepting market failure: Cultural worldviews and the opposition to corrective environmental policies

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  • Cherry, Todd L.
  • Kallbekken, Steffen
  • Kroll, Stephan

Abstract

To explore whether and why people sometimes reject environmental policies that improve individual and collective outcomes, we create an experimental market in which transactions generate a negative externality. Market participants endogenously determine whether to implement corrective policies. We consider three policy instruments (Pigouvian taxes and subsidies, and quantity regulation) and two levels of policy efficiency (full and half). We then explore how individual cultural worldviews might contribute to the rejection of policies that correct the market failure. Our results indicate that people often oppose policies that improve their material outcomes, and we find that such opposition is significantly explained by cultural worldviews. Interesting connections emerge between individual worldviews and specific policy instruments.

Suggested Citation

  • Cherry, Todd L. & Kallbekken, Steffen & Kroll, Stephan, 2017. "Accepting market failure: Cultural worldviews and the opposition to corrective environmental policies," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 193-204.
    • Handle: RePEc:eee:jeeman:v:85:y:2017:i:c:p:193-204
    DOI: 10.1016/j.jeem.2017.05.004
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    Cited by:

    1. Nicholas Janusch & Stephan Kroll & Christopher Goemans & Todd L. Cherry & Steffen Kallbekken, 2021. "Learning to accept welfare-enhancing policies: an experimental investigation of congestion pricing," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 59-86, March.
    2. Knollenborg, Leonard & Sommer, Stephan, 2021. "Diverging beliefs on climate change and climate policy in Germany: The role of political orientations," Ruhr Economic Papers 909, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Douenne, Thomas & Fabre, Adrien, 2020. "French attitudes on climate change, carbon taxation and other climate policies," Ecological Economics, Elsevier, vol. 169(C).
    4. Donatella Gatti & Gaye del Lo & Francisco Serranito, 2023. "Unpacking the green box: Determinants of Environmental Policy Stringency in European countries," Working Papers hal-04188866, HAL.
    5. Birkelund, Johan & Cherry, Todd L. & McEvoy, David M., 2022. "A culture of cheating: The role of worldviews in preferences for honesty," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    6. Todd L. Cherry & Steffen Kallbekken & Stephan Kroll & David M. McEvoy, 2021. "Does solar geoengineering crowd out climate change mitigation efforts? Evidence from a stated preference referendum on a carbon tax," Climatic Change, Springer, vol. 165(1), pages 1-8, March.
    7. Hindsley, Paul & McEvoy, David M. & Morgan, O. Ashton, 2020. "Consumer Demand for Ethical Products and the Role of Cultural Worldviews: The Case of Direct-Trade Coffee," Ecological Economics, Elsevier, vol. 177(C).
    8. Paul A. Hindsley & O. Ashton Morgan, 2020. "The Role of Cultural Worldviews in Willingness to Pay for Environmental Policy," Working Papers 20-03, Department of Economics, Appalachian State University.
    9. Stefano Carattini & Maria Carvalho & Sam Fankhauser, 2018. "Overcoming public resistance to carbon taxes," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 9(5), September.
    10. Cherry, Todd L. & McEvoy, David M. & Westskog, Hege, 2019. "Cultural worldviews, institutional rules and the willingness to participate in green energy programs," Resource and Energy Economics, Elsevier, vol. 56(C), pages 28-38.
    11. Paul R. Hindsley & O. Ashton Morgan, 2022. "The Role of Cultural Worldviews in Willingness to Pay for Environmental Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(2), pages 243-269, February.
    12. Diriye, Abdishakur W. & Jama, Osman M. & Diriye, Jama Warsame & Abdi, Abdulhakim M., 2022. "Public preference for sustainable land use policies – Empirical results from multinomial logit model analysis," Land Use Policy, Elsevier, vol. 114(C).
    13. Diriye, Abdishakur W. & Jama, Osman M. & Chong, Ren & Abdi, Abdulhakim M, 2021. "Value of cultural worldviews and message framing for the acceptability of sustainable land use zoning policies in post-conflict Somalia," SocArXiv mnsw6, Center for Open Science.
    14. Sommer, Stephan & Mattauch, Linus & Pahle, Michael, 2022. "Supporting carbon taxes: The role of fairness," Ecological Economics, Elsevier, vol. 195(C).
    15. Huang, Lingbo & Tiezzi, Silvia & Xiao, Erte, 2022. "Tax liability side equivalence and time delayed externalities," European Journal of Political Economy, Elsevier, vol. 72(C).
    16. Lee, Chien-Chiang & Wang, Chih-Wei & Ho, Shan-Ju, 2022. "The dimension of green economy: Culture viewpoint," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 122-138.
    17. Thiago Fonseca Morello & Luís Fernando Silva e Silva, 2023. "Garnering support for Pigouvian taxation with tax return: a lab experiment," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(2), pages 115-142, April.
    18. Klenert, David & Mattauch, Linus & Combet, Emmanuel & Edenhofer, Ottmar & Hepburn, Cameron & Rafaty, Ryan & Stern, Nicholas, 2017. "Making Carbon Pricing Work," MPRA Paper 80943, University Library of Munich, Germany.
    19. Leopold, Franziska & Blum, Bianca & Walter, Larissa, 2023. "Tax-financed Basic Income – Comparison between three financing schemes and their normative implications," FRIBIS Policy Debate April 11, 2023, University of Freiburg, Freiburg Institute for Basic Income Studies (FRIBIS).
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    22. Huang, Lingbo & Xiao, Erte, 2021. "Peer effects in public support for Pigouvian taxation," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 192-204.

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    More about this item

    Keywords

    C9; D62; H23; Q58; Externality; Pigouvian tax; Policy aversion; Worldviews; Experiments;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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