Date created: | Last Updated:

Category: Project

Description: Carbon pricing is the favored means of climate policy among many economists. However, the public perception of carbon pricing is much less positive, undermining the feasibility of higher prices, especially in sectors where private households are directly affected by price increases. Rebating the revenues from carbon pricing to households is frequently considered as a remedy. This paper examines whether providing information about how carbon pricing and subsequent rebates work can increase public support for climate policy. We conduct two online experiments with quota-representative German samples of 878 and 1,193 respondents, eliciting their support for the national carbon price on heating and transport fuels. We find that information can indeed foster support. Explaining the consumption steering effect of carbon pricing as well as the administrative cost of implementing the refund scheme prove particularly effective. In the second experiment, we provide personalized feedback regarding respondents' carbon footprints and the monetary impact of carbon pricing. The vast majority of our sample initially believes to have a below-average carbon footprint, yet, to still carry a net burden after receiving the rebate: two views that are not consistent with each other. While initial beliefs are sticky, we observe belief updating induced by personalized feedback. Respondents who learn that they may incur a net gain from the refund scheme become significantly more favorable of carbon pricing in general, even supporting higher prices, whereas respondents learning to incur a net burden are not statistically affected by revealing personalized feedback.