Accepting market failure: Cultural worldviews and the opposition to corrective environmental policies |
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| Institution: | 1. Department of Economics, Appalachian State University, Boone, NC 28608-2051, USA;2. CICERO Center for International Climate Research - Oslo, P.O. Box 1129 Blindern, 0318 Oslo, Norway;3. Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, CO 80523-1172, USA;1. North Carolina State University, Department of Agricultural and Resource Economics, Raleigh, NC 27607 USA;2. Directorate for Science Technology and Industry, Organisation for Economic Cooperation and Development, 2 Rue André Pascal, Paris 76116, France;1. Department of Economics, Appalachian State University, Boone, NC 28608, United States;2. Center for International Climate Research (CICERO), 1129 Blindern, 0318 Oslo, Norway;3. Department of Political Science, University of Oslo, 1097 Blindern, 0317 Oslo, Norway;1. School of Economics, The University of Queensland, Brisbane 4072, Australia;2. Institute for Environmental Decisions, ETH Zürich 8092, Switzerland;1. Department of Economics and Statistics, University of Siena (I), Italy;2. Department of Economics, Monash University, Australia;1. Department of Economics, University of Wyoming, 1000 E University Dept 3985, Economics, Laramie, WY 82071, USA;2. George Perkins Marsh Institute and Department of Economics, Clark University, Worcester, MA 01610, USA |
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| Abstract: | To explore whether and why people sometimes reject environmental policies that improve individual and collective outcomes, we create an experimental market in which transactions generate a negative externality. Market participants endogenously determine whether to implement corrective policies. We consider three policy instruments (Pigouvian taxes and subsidies, and quantity regulation) and two levels of policy efficiency (full and half). We then explore how individual cultural worldviews might contribute to the rejection of policies that correct the market failure. Our results indicate that people often oppose policies that improve their material outcomes, and we find that such opposition is significantly explained by cultural worldviews. Interesting connections emerge between individual worldviews and specific policy instruments. |
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| Keywords: | Externality Pigouvian tax Policy aversion Worldviews Experiments |
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