Does Allowing Firms to Pay to Pollute Reduce the Moral Stigma of Pollution?

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Principal investigator:

Hajin Kim

University of Chicago

Email: hajin@uchicago.edu

Homepage: https://www.law.uchicago.edu/faculty/kim


Sample size: 2040

Field period: 05/27/2023-10/26/2023

Abstract
A common critique of market-based instruments is that they commodify pollution and so reduce its moral stigma. If true, the increasing use of market-based instruments could reduce concern for the environment. With a preregistered and demographically representative experimental vignette study of over 2000 Americans, this project finds evidence against the anti-commodification critique. Participants randomly assigned to learn about market-based regulations of a fictitious new pollutant, malzene, did not find malzene pollution to be less morally problematic than those randomly assigned to learn about a mandate dictating pollution limits. The results were sufficiently precise to rule out any decrease in moral stigma from a pollution tax (as compared to a mandate), and to rule out a decrease larger than 4% from a cap-and-trade program. Market-based regulations can also make pollution look worse: Companies paying to pollute in compliance with market-based instruments looked morally worse than companies polluting in compliance with a mandate. This finding suggests a new and different argument against market-based regulations—that they reduce the reputational benefits of legal compliance. But market-based instruments do not appear to reduce the moral stigma of pollution.
Hypotheses
Do market-based regulations, as compared to a mandate, change…
- H1: perceived moral stigma or harm? Key focus on stigma. Predicted null or very small effect (Cohen's d < 0.2).
- H2: behavioral intentions (e.g., support for more regulation)? Predicted null or very small effect (Cohen's d < 0.2).
- H3: perceived moral stigma when companies are in compliance with the regulation? Predicted that market-based regulations will elicit greater moral stigma than mandates when companies are in compliance.
- H4: perceived moral stigma when companies are in violation of the regulation? (No directional prediction)
Experimental Manipulations

Participants read that a newly discovered pollutant, malzene, causes asthma and chest pain and can hurt plant growth. Participants were then randomly assigned to one of four regulatory conditions:
1. A no-regulation control;
2. A command-and-control mandate limiting allowable malzene pollution;
3. A malzene tax; or
4. A malzene cap-and-trade system.

The manipulation text explaining each regulatory system was based on major newspaper descriptions of these regulatory types. To give the anti-commodification the best shot at finding a change in moral stigma, the manipulation highlighted market and price language in the market-based conditions.

Outcomes

Three DVs for all four conditions:
1. Moral stigma of malzene pollution (composite of 3 measures))
2. Perceived harm of malzene
3. Behavioral intentions to, e.g., sign a petition for stronger malzene regulation

Two DVs for the non-control conditions only:
1. Compliance morality: Moral stigma of polluting in compliance with the regulation
2. Violation morality: Moral stigma of polluting in violation of the regulation

Summary of Results

First, participants in the market-based conditions (the tax and cap-and-trade conditions) did not find malzene pollution less morally bad or harmful than those who learned that regulators had enacted a command-and-control mandate, nor did the market-based regulations change their overall behavioral intentions to, e.g., demand more regulation or curb their own malzene-emitting activities.

Second, on compliance morality, market-based instruments made pollution seem morally worse (a fictitious company polluting in compliance with a tax or cap-and-trade seemed morally bad, while a fictitious company polluting in compliance with the mandate looked morally good). Likewise, on violation morality, market-based instruments made pollution seem morally worse, but with less meaningful differences (companies looked morally bad in all conditions for violating their regulation, but morally worse in the market-based conditions).

Finally, exploratory mediation analyses suggested that the competing effects discussed above might be driving the overall null effects on moral stigma.

References
Working paper