We define the concept of moral cost of carbon (MCC): the internal carbon price that individuals implicitly apply to their consumption decisions. We argue that the MCC is a key metric for policy design. The gap between MCC and an actual carbon price tells us how much the carbon externality should be priced. It also reveals the political barriers to implementing a broad-based carbon pricing scheme. We propose an experimental approach to measure the MCC among a target population. A key challenge is that information gaps and the choice environment could have large impacts and confound its elicitation. Our experimental design aims to address these problems. In particular, we show how malleable the MCC is with respect to extrinsic incentives.
(Co-authored by Sébastien Houde, Joachim Schleich, Corinne Faure)
Contact person: Albert Roger
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