Type:
Event

SITE Seminar | Shocking electricity prices and carbon tax aversion

Join us for the next SITE Seminar! On October 20, 2025, we are joined by Jens Ewald (University of Gothenburg), who will present his research “Shocking Electricity Prices and Carbon Tax Aversion.” Using a geographic regression discontinuity design and survey data from Swedish households, the study shows that exposure to sharply increased electricity prices significantly fuels opposition to carbon taxation—driven in large part by belief distortions about affordability and fairness.

Working paper title: Shocking Electricity Prices and Carbon Tax Aversion

By: Jens Ewald

Abstract

I study the causal impact of exposure to high electricity prices on attitudes toward carbon taxation, utilizing a geographic regression discontinuity design and a targeted survey of Swedish households near electricity bidding zone borders. I find that exposure to doubled electricity prices increases opposition to carbon taxation by 20 percentage points. Additionally, this exposure skews respondents' policy beliefs, leading to heightened overestimation of the tax’s costs and reinforcing the erroneous perception that a progressive carbon tax is regressive. To quantify the role of these belief changes in explaining the observed increase in opposition, I employ an instrumental variable approach, leveraging tailored information treatments within the survey as instruments. My analysis indicates that 29% and 58% of the observed increase in opposition can be attributed to pessimistic shifts in the beliefs about the tax's affordability and progressivity, respectively.

 

Photo: Alex Yeung, Shutterstock