Working Paper: NBER ID: w17539
Authors: Matthew J. Kotchen; Kevin J. Boyle; Anthony A. Leiserowitz
Abstract: This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.
Keywords: Willingness to Pay; Climate Change Policy; Greenhouse Gas Emissions; Cap-and-Trade; Carbon Tax
JEL Codes: Q4; Q48; Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sociodemographic characteristics (J21) | willingness to pay (D11) |
| education level (I24) | willingness to pay (D11) |
| age (J14) | willingness to pay (D11) |
| political affiliation (D72) | willingness to pay (D11) |
| beliefs about global warming (Q54) | willingness to pay (D11) |