A tax can nudge: The impact of an environmentally motivated bonus/malus fiscal system on transport preferences

Hilton, Denis; Charalambides, Laetitia; Demarque, Christophe; Waroquier, Laurent; Raux, Charles

doi:10.1016/j.joep.2014.02.007

Cited by 42 publications

(32 citation statements)

References 35 publications

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“…For instance, economic incentives act in an economic way, but also send signals about the social desirability of the choices to be made. A green bonus/malus system aligns financial incentives, but also communicates social values that may in turn influence behavior through the framing of choices as either "good/clean" or "bad/dirty" (Hilton et al 2013). As a result, such a green system can have complex effects, which involve both financial and behavioral dimensions (D'Haultfoeuille et al 2014).…”

Section: Environmental Economics and Environmental Psychologymentioning

confidence: 99%

Behavioral Environmental Economics: Promises and Challenges

Croson

Treich

2014

Environ Resource Econ

139

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Abstract:Environmental issues provide a rich ground for identifying the existence and consequences of human limitations. In this paper, we present a growing literature lying at the interface between behavioral and environmental economics. This literature identifies alternative solutions to traditional economic instruments in environmental domains that often work imperfectly. But it also faces a set of challenges, including the difficulty of computing welfare effects, and the identification of a robust environmental policy based on context-dependent (socio-) psychological effects. We illustrate our critical discussion with two behavioral schemes that have been widely implemented: "green nudges" and "corporate environmental responsibility."

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Section: Environmental Economics and Environmental Psychologymentioning

confidence: 99%

Behavioral Environmental Economics: Promises and Challenges

Croson

Treich

2014

Environ Resource Econ

139

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“…Although the "penalty" for driving an inefficient car is small (60 Swiss francs annually), there is at least the signal that inefficient cars are undesirable. Using stated preference techniques, Hilton et al (2014) show that a bonus/malus has a social norm effect arising from implicitly classifying the less polluting option as pro-social and the polluting option as antisocial. The second factor may lie in the criteria that define inefficient vehicles in…”

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confidence: 99%

The impact of emissions-based taxes on the retirement of used and inefficient vehicles: The case of Switzerland

Alberini

Bareit

Filippini

et al. 2018

Journal of Environmental Economics and Management

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractMany countries have adopted policies designed to reduce CO 2 emissions from road vehicles. Taxes linked to the CO 2 emissions rate or the fuel economy of a vehicle (which is inversely related to its CO 2 emissions rate) are examples of such policies. These taxes are usually imposed on new vehicles, and previous evaluations have estimated the increases in the shares or sales of new and fuel-efficient vehicles associated with such taxes. In contrast, we ask whether taxes on new cars that penalize high emitters induce changes in the retirement of used and inefficient vehicles. We exploit natural experiment conditions in Switzerland to analyze the impact of two different "bonus"/"malus" schemes implemented at the cantonal level. In both schemes, the bonus rewards new efficient vehicles. The malus is retroactive in canton Obwalden, in the sense that it is charged on both new and existing high-emitting cars, but it is only applied prospectively to new cars in Geneva. We use a difference-in-difference design within a survival analysis setting. We find that a bonus/malus accelerates the retirement of existing high-emitting vehicles in Obwalden, shortening the expected lifetime of the three most popular make-models by 7 to 11 months. The effect is the opposite in Geneva, where we estimate that the expected lifetime of these three popular models is extended by 5 to 8 months. These findings have important implications about the desirability of bonus/malus schemes and on their design, as well as on old car scrappage programs.

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“…In fact, the combination of taxation and elements of nudging is reflected also in recent discussions. For example, Hilton et al (2014) find that a bonus-malus tax regime seems to be a promising instrument to guide citizens towards a more environmental-friendly behavior. Keeping in mind, that originally taxation and subsidies would classify more as economic instruments and not as 'classic nudges', our results suggest that behavioral effects play a non-negligible role for the effectiveness of subsidies.…”

Section: Summary and Discussionmentioning

confidence: 99%

Behavioral Responses to Subsidies in Risky Investment Decisions and the Effectiveness of Tax Credits and Grants

2018

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe provide evidence that subsidy types that are identical in monetary terms differ in their behavioral responses and consequently in their effectiveness. In particular, we observe that investments into a subsidized asset are higher under tax credit than under grant. Both subsidy types are essentially very similar, only the mechanism of the subsidy application is different. In case of a grant, an individual gains an amount of money. In case of a tax credit, no money is received directly, but the tax to be paid is decreased by the amount of the tax credit. Our results indicate that these mechanisms have a substantial impact on the effectiveness of subsidies. Applying our findings, governments can 'nudge' the investors to support desired investment decisions by using a certain subsidy type. Particularly, our results suggest that when policymakers are indifferent from a budget perspective between providing a subsidy as a grant or as a tax credit, they should implement a tax credit.

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A tax can nudge: The impact of an environmentally motivated bonus/malus fiscal system on transport preferences

Cited by 42 publications

References 35 publications

Behavioral Environmental Economics: Promises and Challenges

Behavioral Environmental Economics: Promises and Challenges

The impact of emissions-based taxes on the retirement of used and inefficient vehicles: The case of Switzerland

Behavioral Responses to Subsidies in Risky Investment Decisions and the Effectiveness of Tax Credits and Grants

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