Event Title

Session 2A: Do people prefer mandates to taxes and why?

Session Number

Session 2A: 3rd Presentation

Advisor(s)

Tatyana Deryugina, University of Illinois at Urbana-Champaign

Location

Room A147

Start Date

28-4-2017 10:00 AM

End Date

28-4-2017 11:15 AM

Abstract

There are several policy options that can reduce pollution and other externalities associated with economic activity. They can be classified into two categories: mandates, such as minimum fuel efficiency or pollution emission standards, and price-based instruments, such as gasoline taxes or tradable pollution permits. Although economic theory predicts that price-based instruments are more efficient (cheaper for a given unit of pollution reduction) than mandates, price-based instruments are empirically much rarer than mandates. We examined whether individuals prefer fuel efficiency standards (a mandate) over a gasoline tax (a price-based instrument) for the purposes of reducing gasoline usage. We find that respondents strongly prefer fuel efficiency standards and that this preference is fairly stable across many demographic groups.

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Apr 28th, 10:00 AM Apr 28th, 11:15 AM

Session 2A: Do people prefer mandates to taxes and why?

Room A147

There are several policy options that can reduce pollution and other externalities associated with economic activity. They can be classified into two categories: mandates, such as minimum fuel efficiency or pollution emission standards, and price-based instruments, such as gasoline taxes or tradable pollution permits. Although economic theory predicts that price-based instruments are more efficient (cheaper for a given unit of pollution reduction) than mandates, price-based instruments are empirically much rarer than mandates. We examined whether individuals prefer fuel efficiency standards (a mandate) over a gasoline tax (a price-based instrument) for the purposes of reducing gasoline usage. We find that respondents strongly prefer fuel efficiency standards and that this preference is fairly stable across many demographic groups.