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Policy Design and Public Support for Carbon Tax: Evidence from a 2018 U.S. National Online Survey Experiment

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Nives Dolsak at University of Washington
Nives Dolsak
Christopher Adolph
Christopher Adolph
Christopher Adolph
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Aseem Prakash at University of Washington
Aseem Prakash
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Abstract and Figures

Public support for policy instruments is influenced by perceptions of how benefits and costs are distributed across various groups. We examine different carbon tax designs outlining different ways to distribute tax revenues. Using a national online sample of 1,606 U.S. respondents, we examine support for a $20/ton carbon tax that is: (1) Revenue Neutral: revenue is returned to citizens via tax cuts; (2) Compensation‐focused: revenue is directed to helping actors disproportionately hurt by the tax; (3) Mitigation‐focused: revenue funds projects reducing carbon emissions; and (4) Adaptation‐focused: revenue is directed to enhancing community resilience to extreme weather events. We find devoting revenue to mitigation raises overall support for carbon tax by +6.3% versus the control (54.9%) where no information on spending is provided. Other frames raise support in specific subgroups only. Revenue neutrality raises support among lower‐income households (+6.6%) and political independents (+9.4%), while ompensation increases support among lower‐income repondents (+6.1%).
Sample average treatment effects on support for carbon tax Note: Entries represent the estimated average effect of each treatment on the sample of respondents; 95% confidence intervals shown as horizontal lines. Solid symbols indicate effects significantly different from zero at the .05 level. Partially shaded symbols indicate significance at the .1 level. Open symbols indicate non‐significant results. Estimates obtained from an ordered probit adjusting for all covariates, followed by simulation of the change in probability of any support for the carbon tax (support = 5, 6 or 7) resulting from applying each treatment to each subject, given that subject's observed covariates
Sample average treatment effects on support for carbon tax Note: Entries represent the estimated average effect of each treatment on the sample of respondents; 95% confidence intervals shown as horizontal lines. Solid symbols indicate effects significantly different from zero at the .05 level. Partially shaded symbols indicate significance at the .1 level. Open symbols indicate non‐significant results. Estimates obtained from an ordered probit adjusting for all covariates, followed by simulation of the change in probability of any support for the carbon tax (support = 5, 6 or 7) resulting from applying each treatment to each subject, given that subject's observed covariates
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Income‐specific sample average treatment effects on support for carbon tax Note: Entries represent the estimated average effect of each treatment on two subsamples of respondents (those above and those below the median household income); 95% confidence intervals shown as horizontal lines. Solid symbols indicate effects significantly different from zero at the .05 level. Partially shaded symbols indicate significance at the .1 level. Open symbols indicate non‐significant results. Estimates obtained from an ordered probit interacting treatment variables with income and adjusting for all covariates, followed by simulation of the change in probability of any support for the carbon tax (support = 5, 6 or 7) resulting from applying each treatment to each subject in each subsample, given that subject's observed covariates and the specific average treatment effect estimated for that subsample
Income‐specific sample average treatment effects on support for carbon tax Note: Entries represent the estimated average effect of each treatment on two subsamples of respondents (those above and those below the median household income); 95% confidence intervals shown as horizontal lines. Solid symbols indicate effects significantly different from zero at the .05 level. Partially shaded symbols indicate significance at the .1 level. Open symbols indicate non‐significant results. Estimates obtained from an ordered probit interacting treatment variables with income and adjusting for all covariates, followed by simulation of the change in probability of any support for the carbon tax (support = 5, 6 or 7) resulting from applying each treatment to each subject in each subsample, given that subject's observed covariates and the specific average treatment effect estimated for that subsample
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Party‐specific sample average treatment effects on support for carbon tax Note: Entries represent the estimated average effect of each treatment on three subsamples of respondents (self‐identified Democrats, Independents, and Republicans); 95% confidence intervals shown as horizontal lines. Solid symbols indicate effects significantly different from zero at the .05 level. Partially shaded symbols indicate significance at the .1 level. Open symbols indicate non‐significant results. Estimates obtained from an ordered probit interacting treatment variables with party and adjusting for all covariates, followed by simulation of the change in probability of any support for the carbon tax (support = 5, 6 or 7) resulting from applying each treatment to each subject in each subsample, given that subject's observed covariates and the specific average treatment effect estimated for that subsample
Party‐specific sample average treatment effects on support for carbon tax Note: Entries represent the estimated average effect of each treatment on three subsamples of respondents (self‐identified Democrats, Independents, and Republicans); 95% confidence intervals shown as horizontal lines. Solid symbols indicate effects significantly different from zero at the .05 level. Partially shaded symbols indicate significance at the .1 level. Open symbols indicate non‐significant results. Estimates obtained from an ordered probit interacting treatment variables with party and adjusting for all covariates, followed by simulation of the change in probability of any support for the carbon tax (support = 5, 6 or 7) resulting from applying each treatment to each subject in each subsample, given that subject's observed covariates and the specific average treatment effect estimated for that subsample
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ORIGINAL ARTICLE
Policy design and public support for carbon
tax: Evidence from a 2018 US national online
survey experiment
Nives Dolšak
1
| Christopher Adolph
2
| Aseem Prakash
2
1
School of Marine and Environmental Affairs,
University of Washington, Seattle, USA
2
Department of Political Science, University
of Washington, Seattle, USA
Correspondence
Aseem Prakash, Department of Political
Science, University of Washington, 39 Gowen
Hall, Seattle, WA 98195, USA.
Email: aseem@uw.edu
Abstract
Public support for policy instruments is influenced by
perceptions of how benefits and costs are distributed
across various groups. We examine different carbon tax
designs outlining different ways to distribute tax revenues.
Using a national online sample of 1,606 US respondents, we
examine support for a $20/ton carbon tax that is: (1) revenue
neutral: revenue is returned to citizens via tax cuts; (2) compen-
sation-focused: revenue is directed to helping actors dispro-
portionately hurt by the tax; (3) mitigation-focused: revenue
funds projects reducing carbon emissions; and (4) adaptation-
focused: revenue is directed to enhancing community resil-
ience to extreme weather events. We find devoting revenue to
mitigation raises overall support for carbon tax by 6.3 per cent
versus the control (54.9 per cent) where no information on
spending is provided. Other frames raise support in specific
subgroups only. Revenue neutrality raises support among
lower-income households (+6.6 per cent) and political indepen-
dents (+9.4 per cent), while compensation increases support
among lower-income repondents (+6.1 per cent).
1|INTRODUCTION
Public support is critical for policy success. Public administrators therefore seek public input to design policies that
citizens view as fair and effective (Page and Shapiro 1983; Lodge 1994; Majone 1999; Lodge and Stirton 2001;
Howlett 2009). Designing such policies becomes challenging when policies are perceived as imposing differential
costs and benefits across sectors (Soss and Schram 2007). And if these costs or benefits are perceived as concen-
trated on specific sectors (Lowi 1964; Wilson 1980), interest groups mobilize to support or oppose the policy. The
Received: 23 April 2019 Revised: 25 November 2019 Accepted: 21 January 2020
DOI: 10.1111/padm.12657
Public Admin. 2020;98:905–921. wileyonlinelibrary.com/journal/padm © 2020 John Wiley & Sons Ltd 905
... One approach is revenue recycling through dividends or lump-sum rebates. By making the benefit side of these taxes visible to citizens, advocates argue that it could render them politically feasible (Amdur et al., 2014;Bachus et al., 2019;Beiser-McGrath & Bernauer, 2019;Carattini et al., 2019Carattini et al., , 2017Dolšak et al., 2020;Klenert et al., 2018). Evidence from Canada and Switzerland, the only countries where such rebates have been implemented in practice, reveal that the relationship between dividends and public support for green taxes is not as straightforward as previously thought. ...
... However, even where such mechanisms exist (like in Canada or Switzerland), they are often not very visible in public debates . Moreover, the preferred type of revenue recycling remains uncertain, with existing studies focused mainly on rebates showing inconsistent results (Amdur et al., 2014;Bachus et al., 2019;Beiser-McGrath & Bernauer, 2019;Carattini et al., 2019Carattini et al., , 2017Dolšak et al., 2020;Klenert et al., 2018). ...
... From a rational choice perspective, ego-tropic cost-benefit considerations (Armingeon & Bürgisser, 2021;Kirchgässner & Schneider, 2003;Stadelmann-Ste en & Dermont, 2018) suggest that information on personal material benefits is most e ective in gaining support. Consequently, redistributing tax revenues is often highlighted as a key strategy to enhance the acceptability of green taxes, especially for lower-income groups (Bachus et al., 2019;Beiser-McGrath & Bernauer, 2019;Carattini et al., 2019Carattini et al., , 2017Dolšak et al., 2020;Fremstad et al., 2022;Klenert et al., 2018). ...
Can information, compensation and party cues increase mass support for green taxes?
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The transition from fossil fuels to renewable energy presents a major challenge, with green taxes often seen as an efficient policy to promote environmentally friendly behaviour. However, these taxes are difficult to implement due to public concerns about immediate costs versus future environmental benefits. To address this, we conducted a survey experiment in Switzerland to investigate whether information on green tax effectiveness, compensation through revenue recycling, and party cues can make green taxes more attractive to citizens. Our findings indicate that information about compensation mechanisms and party cues can enhance support for green taxes, while single instances of information on green tax effectiveness do not significantly affect beliefs or policy support. Green tax proposals are more popular when compensation strategies address climate change or mitigate social risks and when there is broad party consensus providing clear cues to citizens. However, our findings also underscore the potential trade-off associated with a broad coalition of parties supporting green tax reform, which may lead to diminished support from the left. These insights have important implications for designing and communicating green taxes, highlighting the role of informed beliefs and political signals in shaping public attitudes toward environmental policies.
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... This gap between concern for climate change and support for carbon taxation is well-documented in the literature, with tax aversion being a significant barrier to the political feasibility of using price rationing as an environmental protection tool (Kallbekken et al. 2011). Although efforts have been made to utilize carbon tax revenues to enhance public support (Amdur et al. 2014, Beiser-McGrath and Bernauer 2019, Dolšak et al. 2020, real-world experiences reveal limited impacts of rebate programs on fostering backing for carbon pricing (Mildenberger et al. 2022). Given the fragile support for efficiency-enhancing policies, the question of whether and how support can be increased is crucial. ...
... Given this context, our first expectation is that the information treatment, which highlights the negative externalities of pollution and their economic implications, will positively impact support for both an air pollution tax (H1a) and a carbon tax (H1b) compared to the control group. We anticipate that the treatment effect will be consistent across different revenue utilization scenarios (Amdur et al. 2014, Beiser-McGrath and Bernauer 2019, Dolšak et al. 2020, underscoring the robustness of the treatment's impact on support for a carbon tax, regardless of how revenues are used. 4 Second, this study seeks to identify the mechanisms underlying the treatment effects. ...
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... A particular challenge when it comes to redistributive carbon taxation is that public attitudes toward different policies and fairness preferences diverge between different segments of society. Generally speaking, low-income groups are often more skeptical about carbon taxation [44][45][46], and progressive taxes could arguably foster support in this group [27,28,47], while affluent individuals prefer neutral revenue transfers. Low-income and minority groups in the United States have been shown to be more supportive of climate policies that are combined with social welfare policies [48]. ...
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Carbon taxes are considered to be an efficient method to reduce greenhouse gas emissions, however, such taxes are generally unpopular, partly because they are seen to be unfair. To explore if public acceptance of a stricter carbon tax in Sweden can be enhanced, this study investigates the effectiveness of three different policy designs, addressing collective and personal distributional consequences, and promoting procedural aspects (democratic influence). A large-scale (N = 5200) survey is applied, combining a traditional multi-category answer format with a binary choice format. The results show that the support for higher carbon taxation can be enhanced, if tax revenues are re-distributed to affected groups. Policies with collective justice framings can change attitudes of individuals who express antagonistic attitudes to increased carbon taxation, and influence groups comparably more affected by carbon taxes, such as rural residents, low-income groups and people who are driving long distances. Policy designs addressing collective distributional consequences are however less effective on individuals expressing right-leaning ideological views and low environmental concern. Policies addressing personal distributional outcomes, or perceptions of procedural injustice, had no significant effect on policy acceptance.
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... For example, they find that support for climate policies rises if climate issues are linked to public health [25] or local pollution issues [26]. There is a well-developed literature on public support for various types of carbon taxes, and how this varies when tax revenue is put to different uses [27,28]. Other scholars find that public support for climate policy increases if it is linked to national security [29]. ...
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What motivates members of the U.S. House of Representatives to support legislative action (LA) on climate issues? Although the U.S. Congress has passed very few climate bills in the last 20 years, there has been a substantial number of LAs in the form of votes on bills, resolutions, and amendments. Because climate issues might not get legislative traction on their own, we examine whether linking them with other salient environmental issues changes how legislators vote on climate-focused LAs (C-LAs). Substantively, we examine whether linking climate with clean air, water pollution, environmental justice, and transportation might change House members’ votes. We analyze House votes on climate change LAs as reported by the League of Conservation Voters (LCV). For the 2007–2021 period, LCV scored 406 votes and identified 77 of them as C-LAs. Our regression analysis of the votes of 435 House members on 77 LAs suggests that all else equal, while climate issues without issue linkages diminish legislative support, C-LAs attract votes when they are linked with clean air and environmental justice. However, issue linkages could also backfire: C-LAs linked with water and transportation diminish legislative support.
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... For example, they find that support for climate policies rises if climate issues are linked to public health [25] or local pollution issues [26]. There is a well-developed literature on public support for various types of carbon taxes, and how this varies when tax revenue is put to different uses [27,28]. Other scholars find that public support for climate policy increases if it is linked to national security [29]. ...
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... These concerns include disproportionate effects on rural, carbon-intensive, and/or lower-income households, as well as specific sectors or companies (Berry, 2019;Cronin et al., 2019;Distefano & D'Alessandro, 2023;Goulder et al., 2019;Jacobs et al., 2022;Mayer et al., 2021;Ohlendorf et al., 2021). Consequently, it is increasingly acknowledged that a better understanding of determinants of carbon tax acceptability is key for effective implementation (Andreassen et al., 2024;Carattini et al., 2017;Dolšak et al., 2020;Klenert et al., 2018;Stiglitz & Stern, 2017). ...
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Effective carbon taxation is essential for achieving the green transition. However, there is typically stiff opposition to carbon taxation due to adverse equity and other impacts. Hence, it is essential to get a better understanding of which factors, including the use of tax revenue, can increase acceptability. To date, stated preference methods, rarely used to analyse this issue, have focused only on households. We conduct two national choice experiment surveys of Norwegian households and companies. The experiments include carbon taxes on transport fuel and associated emission reductions and different revenue recycling options as attributes. We find that both groups are more accepting of higher tax levels if the revenues finance climate change mitigation efforts. There is some heterogeneity among the groups with regard to using revenues to reduce different dimensions of inequality. Simulating policy scenarios, we find acceptance for the highest carbon tax among both groups when the revenues are used both to finance climate change mitigation efforts and to reduce rural-urban inequalities. This policy option points to an acceptable carbon tax close to an estimated level necessary for reaching the most ambitious climate target set by the Norwegian government. In Norway, further research should explore whether an effective carbon tax level could be achieved with modest efficiency loss, while also alleviating inequality. ARTICLE HISTORY JEL CLASSIFICATION H23; Q48; Q58; R48 Key policy insights. Policymakers need a better understanding of the factors, including the use of associated tax revenues, that increase carbon tax acceptability in order to ensure that the tax is high enough to effectively reduce emissions.. Simultaneously considering levels of carbon tax acceptance among households and companies could increase the chance of implementing higher, more effective carbon tax levels by identifying mutual interests and points of divergence.. Our results show that companies and households concur to a certain extent on the most socially acceptable policy option; earmarking carbon tax revenues to finance climate change mitigation efforts and to reduce rural-urban inequalities.
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... Some detect favourable responses for applying tax cuts for income or labour taxes to counterbalance the increase in costs 10,11 . Yet other survey studies reveal that respondents prefer to compensate all households equally or specifically target lowincome households and highly affected population groups, such as workers or the elderly, for financial compensation 12,13 . Real-world examples of carbon pricing with complementary revenue recycling are limited 14 . ...
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... 11 Environmental earmarking means that revenues of In this paper earmarking and hypothecation will be used interchangeably, but strictly speaking the two concepts differ: while (legal) earmarking involves binding revenues to expenditures through legislative decision, hypothecation implies only communication of the links carbon pricing are used for expenditures that benefit the environment. Substantial and robust evidence in the literature indicates that environmental and climate earmarking can significantly enhance public acceptability across various contexts Baranzini et al., 2014;Beiser-McGrath et al., 2022;Benjamin et al., 2022;Beuermann & Santarius, 2006;Carattini et al., 2019;Dechezleprêtre et al., 2022;Deroubaix & Lévèque, 2006;Dolšak et al., 2020;Douenne & Fabre, 2020;Dresner et al., 2006a;Dütschke et al., 2023;Ewald et al., 2022;Gevrek & Uyduranoglu, 2015;Grimsrud et al., 2020;Hammerle et al., 2021;Hsu et al., 2008;Kallbekken & Aasen, 2010;Kaplowitz & McCright, 2015;Klok et al., 2006;Kotchen et al., 2017;Maestre-Andrés et al., 2021;Mehleb et al., 2021;Rotaris & Danielis, 2019;Saelen & Kallbekken, 2011;Steg et al., 2006;Thalmann, 2004;Zawadzki et al., 2022). For instance, Dechezleprêtre et al. (2022) show that the support for carbon taxes is the highest when the revenues are used for funding environmental infrastructures or subsidies to low-carbon technologies. ...
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Carbon pricing has emerged as a prominent policy tool to mitigate climate change due to its proclaimed high efficiency and effectiveness. However, the successful and sustainable implementation of carbon pricing also depends on the public acceptability. This paper investigates how revenue recycling shapes public attitudes towards carbon pricing. A systematic literature review identified 48 relevant studies from 2004 to March 2023. Using qualitative content analysis I discern relevant factors and construct a typology of revenue recycling options. Subsequently, a consensus ordinal ranking of revenue recycling options, based on the empirical findings of the reviewed studies, synthesizes current knowledge. The results reveal that revenue recycling has a crucial impact on public acceptability. While environmental earmarking ranks highest, and reducing corporate taxes is the least preferred option, numerous other revenue recycling options lie between these two options. Moreover, the literature presents divergent findings regarding the level of public acceptability of specific revenue recycling options. The diversity of research contexts and designs introduces inherent limitations that may explain variations in rankings observed across different studies. Notably, I identify political trust related to and salience of revenue recycling as important factors affecting public acceptability of carbon pricing. Finally, this research offers a framework for policymakers seeking to design revenue recycling strategies that align with public preferences to implement carbon pricing.
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