Environmental Protection, Social Policy, and Green Taxation

Two of the most pressing challenges governments face nowadays are rising economic inequality and climate change. As indicated by mounting media attention and political protest, both issues have the potential to cause significant political disruption in the future if they are not being addressed with substantial policy interventions. Reducing economic inequality and combatting climate change are not only two strongly supported policy goals, but they will also require significant public investments. In times of limited fiscal resources, governments struggle to raise additional revenues needed to finance both, making trade-offs between generally supported policy goals likely.

In ongoing joint work with Klaus Armingeon and Isabelle Stadelmann-Steffen, we are investigating with survey experiments to what extent information and compensation mechanisms can increase popular support for green taxes. Transitioning from fossil fuels and nuclear energy to an age of renewable energy is a challenge for many industrialized countries. In this context, many countries have introduced “soft policies” (e.g., voluntary self-regulation) or traditional subsidies for renewable energies, which, however, are either not effective enough in terms of goal attainment or financially very expensive. By contrast, incentive-based steering mechanisms (e.g., incentives or environmental taxes) are widely acknowledged to be the most effective and economically efficient instruments, since they generate continuous and long-term incentives for environmentally friendly innovation and practices.

However, ecological taxes have been shown to be particularly difficult to implement politically, whereas conventional regulatory approaches (i.e., rules and bans) tend to be more popular for purposes of practical implementation. Moreover, voters seem to prefer policies of regulation and prohibition over market-oriented policies. Scholars have demonstrated that the cost perceptions that characterize incentive-based policy instruments are a fundamental reason for their unpopularity. Citizens assume that they must choose between a better quality environment (in the future) and a higher real income today, and they often tend to prefer the latter. Traditional regulatory policies, where costs are less visible to citizens, are often perceived to be more euitable and fairer.

Thus, the nature of ecological taxes in particular leads to a situation in which the costs related to a policy proposal are immediately tangible and visible for individual households, whereas the potential benefits of these instruments are much less so. We aim to investigate two specific but crucial aspects that could influence support for ecological taxes:

  1. Does visible compensation increase support of ecological taxes? By compensation we mean that an ecological tax could generate some benefits for individuals. These can be material benefits (e.g., if the revenues of ecological tax is redistributed to the population, especially households with low energy/electricity consumption could profit), or immaterial benefits (e.g., if a tax is effective and leads to a desired outcome).

  2. Does information and knowledge on the economic mechanisms behind ecological taxes increase individual beliefs in the efficacy of these instruments, and eventually increase their popular support?

In a previous project with Klaus Armingeon, I have studied how citizens decide if they have to choose between goals they support in principle, such as spending on efforts to reduce inequality and channeling resources toward initiatives to protect the environment? We discuss three major factors that help explain this choice – information, self-interest, and ideological orientation. Our experimental study shows that information is not a significant determinant of such choices, and that ideology is only important as long as there are no conflicting goals. Once citizens have to decide between redistribution and environmental protection, myopic self-interest trumps all other theoretically relevant variables mentioned in the literature.


Work in Progress

  • Green Taxes - Does Information and Compensation Increase Popular Support? Evidence from Survey Experiments in Switzerland (with Isabelle Stadelmann-Steffen and Klaus Armingeon).
Reto Bürgisser
Reto Bürgisser
Postdoctoral Researcher

My research interests include political economy, comparative politics, and political behavior.