Experimental Sustainable Finance Symposium 2024

I talked about our latest paper on carbon pricing, in which we investigated whether carbon taxes with and without carbon dividends improve cooperative behavior to mitigate simulated climate change. We implemented a randomized controlled trial on a large sample of the U.S. general population (N = 2,116). Played in real-time in groups of four, we tested three carbon-pricing treatments and a baseline condition within a modified threshold public goods game of loss avoidance. %We investigate whether a carbon tax alone, a carbon tax with carbon dividends paid out in equal share (symmetric dividend), and a carbon tax with carbon dividends paid out to below-average polluters only (asymmetric dividend), reduces carbon-emitting group consumption. We measure the portion of groups who successfully remain below a critical consumption (emission) threshold. We found that a carbon tax coupled with carbon dividends reduces carbon-emitting group consumption relative to a baseline condition with no tax, and relative to a carbon tax only. A carbon tax coupled with carbon dividends paid out to below-average polluters (asymmetric dividend) worked best, with 94% of groups remaining below a critical consumption (emission) threshold. We also found that experiencing the asymmetric dividend condition positively affected perceptions of carbon pricing with carbon dividends.