Pigouvian Tax Aversion and Inequity Aversion 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: http://www.library.appstate.edu/

Abstract: We use an experimental market with externalities to test whether inequality aversion could help explain the popularity of earmarking tax revenues. We find that voter opposition is not fully explained by material self-interest: Results indicate that preferences for fairness influence voting behavior, with greater inequality in tax revenue distribution negatively affecting the acceptability of the tax. In addition to this, we also discover a significant degree of tax-aversion in the votes. Our findings provide greater understanding of the behavioral underpinnings of the positive impact that earmarking has on the acceptability of Pigouvian taxes.

Additional Information

Publication
Dallbekken, S., Kroll, S., and Cherry, T. L. (2010) Pigouvian Tax Aversion and Inequity Aversion in the Lab. Economics Bulletin, 30(3): 1914-1921. (July 2010) Available online at: http://www.economicsbulletin.com/
Language: English
Date: 2010