Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Todd Cherry Ph.D., Professor (Creator)
Institution
Appalachian State University (ASU )
Web Site: https://library.appstate.edu/

Abstract: Tax-aversion reduces the likelihood that price rationing can be a politically viable tool for environmental protection. We examine the case of the classic Pigouvian tax to control a negative externality, and consider how recycling the revenues, labeling of the tax and information about its purpose affects the support for taxation. We test the support for taxation within a single-price market experiment, in which purchases by some buyers impose external costs on others. Observing behavior consistent with tax-aversion, we also find that recycling the revenues to more narrowly targeted groups seems to increase support for taxation. In the absence of narrow revenue recycling, labeling a Pigouvian instrument as a ‘tax’ may significantly lower the likelihood of voter support.

Additional Information

Publication
Kallbekken, S., Kroll, S., & Cherry, T. L. (2011). Do you not like pigou, or do you not understand him? Tax aversion and revenue recycling in the lab. Journal of Environmental Economics and Management, 62(1), 53-64. Publisher’s version available from www.elsevier.com (ISSN: 0095-0696). DOI: 10.1016/j.jeem.2010.10.006
Language: English
Date: 2011

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