26 February: Adrien Fabre (QSMS Seminar)

Presenting “Yellow Vests, Carbon Tax Aversion, and Biased Beliefs” at 12:15-13:30 in QA406.


On 26 February  2020, we have Adrien Fabre of Paris School of Economics visiting us. She is going to give a seminar on “Yellow Vests, Carbon Tax Aversion, and Biased Beliefs” at 12:15-13:30 in room A406 in Building Q, Budapest University of Technology and Economics, Faculty of Economic and Social Sciences, Magyar tudósok körútja 2, 1117 Budapest. Sandwiches will be provided. Please help the organisers by registering in advance at egervari.zsuzsanna@qsms.bme.hu Registration is free.
Also, see our Facebook event.

Abstract: This paper seeks to understand how beliefs endogenously form and determine attitudes towards policies. Using a new survey and National households’ survey data, we investigate the case of carbon taxation in France in the context of the Yellow Vests movement that started against it. We find that French people would largely reject a Tax & Dividend policy, i.e. a carbon tax whose revenues are redistributed uniformly to each adult. However, they also overestimate the negative impact of the scheme on their purchasing power, wrongly think it is regressive, and do not perceive it as environmentally effective. Using information about the scheme as instrument to identify robust causal effects, our econometric analysis shows that correcting these three biases would suffice to generate majority approval. Yet, we find that people’s beliefs are persistent and their revisions biased towards pessimism so that only a small minority can be convinced. Indeed, if overly pessimistic beliefs cause tax rejection, they also result from it through motivated reasoning, which manifests what we define as “tax aversion”.