Warming to carbon taxes? Experimental Investigations of the role of tax structure, framing, and comprehension on perceived fairness and acceptability

Many people find carbon taxes to be unfair and, hence, there is little political appetite for them. But carbon taxes can be designed in many ways: how much people pay, who pays most, how the money is used or redistributed. In this Irish Research Council-funded project, we are investigating whether some designs can provide strong disincentives to produce emissions yet also be perceived as fair.  Whether people find a carbon tax acceptable may depend also on how it is framed and explained. It is reasonable to assume understanding why a tax is higher on one product than another will alter the likelihood that the tax is seen as fair. Without that understanding, even fair policies may be regarded as arbitrary and unjust. By using controlled laboratory and online experiments, we will be able to draw stronger inferences about what causes people to view particular designs as fair or unfair. These will inform further interventions to test. In summary, this project on the design, framing and comprehension of carbon taxes will blend an idea central to the economics of climate change – including the social cost of emissions in the market price – with state-of-the-art methods from behavioural economics and experimental psychology. Findings will provide direct evidence for policy.