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Can Pigou at the Polls Stop Us Melting the Poles?

Can Pigou at the Polls Stop Us Melting the Poles? Economists recommend Pigouvian taxes as the most efficient way to fight climate change. Yet, carbon taxes are difficult to implement politically. To understand why, we study Washington State’s two failed carbon tax referendums from 2016 and 2018—the first such votes in the United States. We find that average voters’ opposition to the carbon tax can partly be explained by the anticipation of higher energy costs. Meanwhile, ideology—as measured by voting on other initiatives—explains 90% of variation in voting across precincts. These results suggest that ideology plays a crucial role in driving opposition to carbon taxes. We find that revenue recycling interacts with ideology: conservatives preferred the 2016 revenue-neutral policy, while liberals preferred the 2018 green-spending policy. Finally, we forecast that no other state is liberal enough to pass Washington’s policies. Thus, opinion surveys showing majority support for the carbon tax can be misleading. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of the Association of Environmental and Resource Economists University of Chicago Press

Can Pigou at the Polls Stop Us Melting the Poles?

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Publisher
University of Chicago Press
Copyright
© 2023 The Association of Environmental and Resource Economists. All rights reserved.
ISSN
2333-5955
eISSN
2333-5963
DOI
10.1086/722970
Publisher site
See Article on Publisher Site

Abstract

Economists recommend Pigouvian taxes as the most efficient way to fight climate change. Yet, carbon taxes are difficult to implement politically. To understand why, we study Washington State’s two failed carbon tax referendums from 2016 and 2018—the first such votes in the United States. We find that average voters’ opposition to the carbon tax can partly be explained by the anticipation of higher energy costs. Meanwhile, ideology—as measured by voting on other initiatives—explains 90% of variation in voting across precincts. These results suggest that ideology plays a crucial role in driving opposition to carbon taxes. We find that revenue recycling interacts with ideology: conservatives preferred the 2016 revenue-neutral policy, while liberals preferred the 2018 green-spending policy. Finally, we forecast that no other state is liberal enough to pass Washington’s policies. Thus, opinion surveys showing majority support for the carbon tax can be misleading.

Journal

Journal of the Association of Environmental and Resource Economists – University of Chicago Press

Published: Jul 1, 2023

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