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Can Pigou at the Polls Stop Us Melting the Poles?

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  • Soren Anderson
  • Ioana Marinescu
  • Boris Shor
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.

Suggested Citation

  • Soren Anderson & Ioana Marinescu & Boris Shor, 2023. "Can Pigou at the Polls Stop Us Melting the Poles?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(4), pages 903-945.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/722970
    DOI: 10.1086/722970
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    1. Stefano Carattini & Andrea Baranzini & Philippe Thalmann & Frédéric Varone & Frank Vöhringer, 2017. "Green Taxes in a Post-Paris World: Are Millions of Nays Inevitable?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(1), pages 97-128, September.
    2. Matthew J. Holian & Matthew E. Kahn, 2014. "Household Demand for Low Carbon Public Policies: Evidence from California," NBER Working Papers 19965, National Bureau of Economic Research, Inc.
    3. Stefano Carattini & Maria Carvalho & Sam Fankhauser, 2018. "Overcoming public resistance to carbon taxes," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 9(5), September.
    4. Jesse Burkhardt & Nathan W. Chan, 2017. "The Dollars and Sense of Ballot Propositions: Estimating Willingness to Pay for Public Goods Using Aggregate Voting Data," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 479-503.
    5. Matthew J. Holian & Matthew E. Kahn, 2015. "Household Demand for Low Carbon Policies: Evidence from California," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 205-234.
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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