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Carbon Pricing, Carbon Dividends and Cooperation: Experimental Evidence

Author

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

Abstract

Anthropogenic climate change is one of the most pressing global issues today and finding means of mitigation is of utmost importance. To this end, we investigate whether carbon taxes on their own and coupled with revenue recycling schemes (symmetric or asymmetric carbon dividends) improve cooperative behavior in a modified threshold public goods game of loss avoidance. We implement a randomized controlled trial on a large sample of the U.S. population and measure the portion of groups who successfully remain below a critical consumption threshold. We find that a carbon tax with symmetric dividends reduces harmful consumption levels, but coupling the tax with asymmetric dividends not only enhances consumption reduction but also significantly improves group cooperation in avoiding simulated climate change. Our results show that the application of a carbon tax and asymmetric carbon dividends reduces the failure rate to about one-fourth (6%), compared to the 22% observed in a baseline condition. We find that environmental attitudes, conservatism, education, and gender are significantly associated with success rates in staying below the threshold.

Suggested Citation

  • Sebastian Bachler & Sarah Lynn Flecke & Jürgen Huber & Michael Kirchler & Rene Schwaiger, 2023. "Carbon Pricing, Carbon Dividends and Cooperation: Experimental Evidence," Working Papers 2023-07, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2023-07
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    References listed on IDEAS

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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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