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Abstract:
Despite being an economists’ favorite, carbon pricing suffers from limited public support, undermining the feasibility of target-consistent prices. Revenue rebating is frequently considered as a remedy. Across two experiments, we examine whether support rises when people receive (i) information about how carbon pricing and rebates work and (ii) personalized feedback on their carbon footprints and expected net monetary impact under carbon pricing with equal-per-capita rebates. Explaining how carbon pricing steers consumption and the administrative cost of rebates increase support. Most respondents hold inconsistent beliefs: they think their carbon footprint is below average but still expect to lose money after the rebate. Personalized feedback induces partial belief updating and increases support for carbon pricing among respondents who would actually gain, while support by net losers is not significantly affected. Our findings highlight the need for transparent, economics-based communication of climate policy.
