The Political Price of Pricing Carbon: Gasoline Taxes and Support for Incumbents in 25 Countries 2003-2018

Abstract

Speakers - Andreas Duit, Stockholm University Ole Martin Laegreid, Norwegian Research Centre One main reason why political representatives are thought to be reluctant to issue effective environmental policies is that such reforms generally impose costs on large parts of their constituencies, without offering any immediate benefits. Policies that reduce short-term well-being among constituents are assumed to lead to reduced support for those representatives responsible for designing and implementing the policies. Such reductions in support might then translate into lower vote shares and loss of seats or office for incumbents. Political representatives seeking electoral survival thus face disadvantageous incentives for enacting environmental polices, and, as a result, environmental policies tend to be underprovided in representative democracies. In this paper we assess the validity of this assumption by analyzing how gasoline taxes changes impact voter support for incumbents. Using gasoline taxation data and monthly vote intention estimates for 157 parties in 25 countries for the period 2003-2018, we find that support for incumbents is affected by tax increases, but only in the short term. We then compare these findings against estimates of optimal gasoline taxation. Our analysis suggests that the political price for climate-optimal gasoline taxation is tangible, but lower than commonly assumed.