Despite its potential for curbing greenhouse gas emissions, carbon taxation encounters strong public resistance in many countries. However, social acceptability of carbon taxation heavily depends on how the generated revenues are used. Citizens prefer carbon taxation schemes where tax revenues are earmarked for environmental protection rather than for non-environmental purposes (e.g., lowering the value-added tax or labour taxes). Here, we test the hypothesis that acceptability varies across earmarking domains according to a mental accounting heuristic, by which people create mental budgets where the origin of revenues is matched thematically with their domain of use. Across two experiments conducted in the United Kingdom and in France (Ntotal = 3500), we show that citizens display a specific preference for tax designs where the earmarking domain is matched with the revenue source (i.e. a carbon tax earmarked for environmental protection), relative to an unmatched tax scheme. Moreover, we find that acceptability of carbon taxation increases with the proportion of tax revenues earmarked for environmental protection.
Co-benefits associated with public support for climate-friendly COVID-19 recovery policies and political activism
