No. 2018-16 - Pigou pushes preferences: decarbonisation and endogenous values

Date: 03 December 2018

Avoiding unmanageable climate change implies that global green- house gas emissions must be reduced rapidly. A significant body of literature shows that policy instruments such as carbon prices can make an important contribution to this goal. In contrast, changes in preferences or values are rarely considered, even though other major socioeconomic transitions – such as those from reducing smoking and drink-driving – have succeeded partly because values have changed. This article examines the impact of climate policy-induced changes in consumers’ values. We demonstrate that when changes in values through policies occur, and are not accounted for, such policies are inefficient. First, target-achieving carbon taxes must be adjusted if they crowd-in or -out social preferences. Second, when the urban built environment changes mobility preferences, low-carbon infrastructure investments are more valuable. Third, ...

Cameron Hepburn Nicholas Stern Linus Mattauch

Economics of Sustainability

Economics of Sustainability

No. 2018-16 - Pigou pushes preferences: decarbonisation and endogenous values


Type: inet-working-paper

Mattauch, L., Hepburn, C. & Stern, N. (2018). 'Pigou pushes preferences: decarbonisation and endogenous values'. INET Oxford Working Paper No. 2018-16.


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