Author

Caffera, Marcelo ; Chávez, Carlos ; López, Carolina ; Murphy, James J. ; Briozzo, Juan

Editor

Universidad de Montevideo, Facultad de Ciencias Empresariales y Economía

Date

2025

Extensión

31 p.

Abstract

We present the results of a series of public-bad laboratory experiments in which we assess whether a salient message suggesting pro-social behavior with an implicit moral appeal, and a tax that is insufficient to induce the optimal level of the externality, can complement each other when implemented jointly. Our results suggest that, on average, (a) behavior is consistent with subjects having moral preferences, (b) a salient message suggesting pro-social behavior can be effective, (c) preferences are nonseparable from the choice of instrument (i.e, the tax crowds-out part of the subjects´ moral preferences), and crucially, (d) the tax and the informative message do not complement each other. The tax has a greater impact on reducing the externality than the prosocial guideline, even though the tax was only half of that needed to reach the socially optimal level. Nevertheless, when implemented together, the total effect of both instruments is similar to that of the tax alone. This result is stronger for those subjects that are more “nudgeable” by the prosocial guideline. These results challenge the policy recommendation that nudges can effectively complement low taxes while awaiting the political will to raise them.

Keyword

Economic experiment Nudge Prosocial guideline Public bad Tax

Tipo

Reporte técnico

Derechos

Abierto

Versión

Aceptada

Financiadores

Funding for this study came from Agencia Nacional de Investigación e Innovación (ANII), grants FCE_1_2019_1_156336 and POS_FCE_2020_1_1009209. Chávez acknowledges partial funding by ANID/FONDAP/1523A0007 and project Fondecyt Regular 1230266.

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• Documentos de trabajo [67]