2023-06-06 14:45:03
Carbon taxes increase the cost of the products to which they are applied, with the aim of reducing their consumption. But is this effect really achieved? A recent study has sought to clarify this issue.
At the Faculty of Economics and Business of the University of the Basque Country (UPV/EHU), it has been experimentally verified that showing the carbon rate in the price of products and knowing that a carbon tax is being paid activates moral license of many consumers, who then show a tendency to consume more.
To address climate change, raising the price of carbon-intensive goods and services, through a tax on carbon emissions, is considered an important market policy. As a consequence of said tax, “the producer would have to pay a fixed amount for each kilogram of carbon dioxide that he emits into the atmosphere. Thus, the production costs of polluting products would become more expensive, product prices would rise and demand would fall”, explains Aitor Marcos, a researcher at the Faculty of Economics and Business at the UPV/EHU.
In many countries, there have been problems in the application of this tax, because many people have been against it, so many experts demand transparency regarding the impact of taxes on carbon. It is up to the political authorities to decide whether to show or hide the carbon tax or carbon fee in the retail price as a specific component of the price. It was suspected that this transparency could have unintended consequences. And now the authors of the new study have shown that showing carbon fees in the price is less effective in reducing demand than hiding them.
Admit Marcos. (Photo: Mitxi. UPV/EHU)
Greater incidence in the people most concerned about climate change
The authors of the study have carried out various experiments in the United States, with five consumer products: sneakers, a hamburger, a television set, a mobile phone and a microwave oven. As the authors of the study explain, these are not excessively polluting products, but they have an energy-intensive production process, and their absolute consumption is currently very high. The researchers offered one group of buyers products that displayed the carbon tax on the price tag, and another group, products with the hidden tax. The price was the same in both cases.
Researchers have found that “knowing that you are paying a carbon tax or carbon fee activates the moral licenses of consumers, and that the demand for these products does not decrease, but increases.” The researcher affirms that this is a very paradoxical attitude: “Since the payment of taxes is perceived positively, consumers can morally justify the purchase of polluting products. In other words, consumers will continue buying polluting products, because they believe that paying said tax gives them moral permission to pollute”.
As Aitor Marcos explains, “we saw that the purchase intention of the participants was systematically higher when the carbon tax was shown. Consumers in this group had more intention to buy the product and had a more positive moral image towards themselves, which confirms the moral license hypothesis. Likewise, they have detected a greater impact of carbon taxes on people who are concerned about climate change and are not conservative, since “in them, there was an increase in moral self-concept motivated by the payment of the carbon tax.” carbon. They did not correctly interpret the carbon tax, and therein lies the paradox, because these same people are the ones who demand greater transparency in the application of the carbon tax”.
This research is framed within the context of the doctoral thesis that Aitor Marcos is carrying out at the Faculty of Economics and Business of the UPV/EHU, under the direction of the professors of the Department of Financial Economics II Patrick Hartmann and José María Barrutia.
The study is entitled “Carbon tax salience counteracts price effects through moral licensing”. And it has been published in the academic journal Global Environmental Change. (Source: UPV/EHU)
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