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Carbon Pricing, Carbon Dividends and Cooperation: Experimental Evidence

Author

Listed:
  • Bachler, Sebastian
  • Flecke, Sarah Lynn
  • Huber, Jürgen
  • Kirchler, Michael
  • Schwaiger, Rene

Abstract

We investigated whether carbon taxes with and without carbon dividends improve cooperative behavior to mitigate simulated climate change. We implemented a randomized controlled trial on a large sample of the U.S. general population (N=2,116). Played in real-time in groups of four, we tested three carbon-pricing treatments and a baseline condition within a modified threshold public goods game of loss avoidance. We found that a carbon tax coupled with carbon dividends reduces carbon-emitting group consumption relative to a baseline condition with no tax, and relative to a carbon tax only. A carbon tax coupled with carbon dividends paid out to below-average polluters (asymmetric dividend) worked best, with 94% of groups remaining below a critical consumption (emission) threshold. We also found that experiencing the asymmetric dividend condition positively affected perceptions of carbon pricing with carbon dividends.

Suggested Citation

  • Bachler, Sebastian & Flecke, Sarah Lynn & Huber, Jürgen & Kirchler, Michael & Schwaiger, Rene, 2024. "Carbon Pricing, Carbon Dividends and Cooperation: Experimental Evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 225(C), pages 37-50.
    • Handle: RePEc:eee:jeborg:v:225:y:2024:i:c:p:37-50
    DOI: 10.1016/j.jebo.2024.07.004
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    More about this item

    Keywords

    Climate change; Carbon pricing; Carbon tax; Carbon dividend; Revenue recycling; Cooperation;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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