The Making and Breaking of Carbon Tax Support: Asymmetric Effects of Welfare State Expansions and Retrenchments

Carbon taxes are widely recognized as an effective policy to reduce carbon emissions, yet they often face resistance from key voter groups who perceive them as regressive and unfair. While prior research has examined the impact of increasing generosity in individual social policies, little attention has been given to whether expansions and retrenchments differentially affect public acceptance of climate policies, or how these effects vary across different welfare programs. This study examines how changes in welfare state generosity—both expansions and retrenchments—affect the acceptability of carbon taxes. Using a conjoint experiment with a sample of 2,606 Swedish respondents, we evaluate the causal effects of increasing and decreasing the generosity of four core welfare programs (child benefits, old-age pensions, unemployment insurance, and sickness insurance) on the acceptability of carbon taxes on gasoline and diesel. The findings support our pre-registered hypothesis: while expanding welfare benefits, primarily old-age pensions, increases public support for carbon taxation, retrenchments lead to a significantly greater reduction in acceptability than expansions lead to gains. These results highlight the asymmetry in public responses to changes in welfare generosity and underline the critical role of robust welfare systems in securing support for ambitious climate policies. The findings carry important implications for policymakers seeking to balance climate objectives with social equity and public approval.