Elsevier

Resource and Energy Economics

Volume 55, February 2019, Pages 24-48
Resource and Energy Economics

Nudge and tax in an environmental public goods experiment: Does environmental sensitivity matter?☆

Highlights

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The nudge does not perform better than a tax.

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The nudge performs well with individuals sensitive to environmental matters.

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Nudge implementation should target specific individuals.

Abstract

An experiment is proposed in which the subjects could contribute to a public good which could be thought of as reducing pollution, which was stochastic. A nudge (announcement of the socially optimal contribution) and a tax are implemented to improve the level of contributions. The environmental sensitivity and optimism of the subjects are also elicited. Our first result shows that the implementation of the nudge does not perform as well as the implementation of the tax. The reaction to the nudge depends directly on individuals’ environmental sensitivity, contrary to the reaction to the tax. Secondly, the nudge performs well with highly sensitive subjects only during the first half of its implementation. Lastly, the efficiency analysis shows that the implementation of the nudge significantly decreases the groups’ welfare for the least sensitive subjects, in comparison to the baseline.

JEL classification

C91
H41
Q58

Keywords

Environmental sensitivity
Incentives
Nudge
Optimism
Tax
☆

This paper has greatly benefited from the judicious comments of two anonymous referees. We would like also to thank Giuseppe Attanasi, Gary Charness, Timo Goeschl, Mathieu Lefebvre, Phu Nguyen-Van, Anne Rozan and Sandrine Spaeter for their helpful comments. We are grateful to the participants at the Strasbourg Workshop on Experimental Economics (Strasbourg, 2016), at the international colloquium Conative Nudges: Changes in Desires (Rennes, 2016), at the ASFEE conference (Rennes, 2017) and at the EAERE conference (Athens, 2017). This experiment received financial support from the GERIHCO project.

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