Average ranking scores (ranging between 1 and 3 where 1 is the most preferred scheme and 3 the least preferred scheme) when either 75% of carbon tax revenues are earmarked for environmental protection and 25% redistributed as a cash transfer to the three lowest income deciles, that can only be spent on pro-environmental expenses (“environmental cash transfer”), 75% of carbon tax revenues are earmarked for environmental protection and 25% redistributed as an unconditional cash transfer to the three population deciles with lowest income (“unconditional cash transfer”), or 100% of carbon tax revenues are earmarked for environmental protection (“no cash transfer”).

Results are plotted for each study (N4A = 649, N4B = 643).</p

Mean policy support in the British study (N_3A = 801) and in the French study (N_3B = 758) when either 0%, 25%, 50%, 75% or 100% of carbon tax revenues are earmarked for environmental protection.

Policy support was rated on a ten-point Likert scale. Plotted are 95% CIs. Average levels of support when either 0% or 100% of carbon tax revenues are earmarked for environmental protection are consistent with those observed in Study 1.</p

Mean policy support for the four earmarked tax schemes in all of the British studies (carbon tax: Study 1A, inheritance tax: Study 2A, tobacco tax: Study 2A’).

Policy support was rated on a ten-point Likert scale. The matched earmarking domain corresponds to: (a) environmental protection in the carbon tax study, (b) poverty reduction programs in the inheritance tax study, (c) health and tobacco control programs in the tobacco tax study. Plotted are 95% CI.</p

Illustration of the experimental design.

This is a 2 (revenue source) x 3 (expenditure domain) between-participants design, with participants randomly allocated to one of six conditions. When carbon tax revenues are earmarked towards the environmental domain, it is a “matched earmarking” scheme. When carbon tax revenues are earmarked towards participants’ preferred policy domain, it is a “mismatched earmarking” scheme.</p

S1 Text -

Despite its potential for curbing greenhouse gas emissions, carbon taxation encounters strong public resistance. However, acceptability depends on how tax revenues are used. We test the hypothesis that mental accounting theory can both explain systematic patterns in citizens’ preferences, such as the support for environmental earmarking, and help design a carbon tax scheme that is both acceptable and fair. Across six experiments conducted in the United Kingdom and in France (Ntotal = 7100), we show that: (a) There is an acceptability boost when the use of tax revenues matches the tax domain thematically (e.g., allocating carbon tax revenues to green projects), as demonstrated by an interaction effect between the tax domain and the expenditure domain on the level of tax support. This result is consistent with the use of a mental accounting heuristic, by which people create mental budgets where the origin of revenues is matched thematically with their domain of use. (b) Carbon tax acceptability varies with the proportion of tax revenues earmarked for green projects. (c) A mixed carbon tax scheme, in which most revenues are earmarked for green projects and the rest is redistributed to low-income households to be spent on sustainable expenses, receives most support among the tested options. We also demonstrate the robustness of the mental accounting heuristic in two ways: by showing that the preference for environmental earmarking of carbon taxes is observed across all relevant subsections of the population, and that mental accounting also appears to shape preferences for health-related earmarking of tobacco taxes, and social-related earmarking of inheritance taxes.</div

Bar graphs representing policy support for a carbon tax increase when revenues are either earmarked for environmental protection (‘matched earmarking’) or not earmarked, for each study (N_1A = 706, N_1B = 429).

Policy support was rated on a ten-point Likert scale. Data points from the two British samples are combined. Plotted are 95% confidence intervals.</p

Mean policy support in the British study for the four earmarked tax schemes (revenue source: Generic tax or carbon tax; expenditure domain: Preferred policy domain or environmental domain), when splitting the sample according to the priority given to environmental protection, political trust, social trust, political ideology, highest education level, gender, age, perceived relative income level and residence area (see Note D in S1 Text for the detailed procedure).

Policy support was rated on a ten-point Likert scale. Data points from the two British samples are combined (Ntotal = 1250). Plotted are 95% CIs.</p

Mean policy support when tax revenues, coming from a generic tax or a carbon tax increase, are either earmarked towards participants’ preferred policy domain, towards environmental protection or not earmarked (pooled into the general budget), in each study (N_1A = 2096, N_1B = 1271).

Policy support was rated on a ten-point Likert scale. Data points from the two British samples are combined. Plotted are 95% CIs.</p

An example of one of the 30,000 trash bins deployed in Paris since 2013, designed to blend in with the urban space.

An example of one of the 30,000 trash bins deployed in Paris since 2013, designed to blend in with the urban space.</p

Example of a displayed image in studies 2.A and 2.B.

A. Modified photograph in the green-bag condition. B. Modified photograph in the blue-bag condition.</p