Micro Seminars EUR

Stefano Carattini (London School of Economics, United Kingdom)
Friday, December 9, 2016

Many people are against a garbage tax even though it often works. We study how a Supreme Court decision, mandating the Swiss Canton of Vaud to implement a tax on garbage, affects garbage production and beliefs about the tax. We adopt a difference-in-differences approach exploiting that parts of Vaud already implemented a garbage tax before the mandate. Pricing garbage by the bag (PGB) is highly effective, reducing unsorted garbage by 40 % (arc-elasticity of -0.3), increasing recycling of aluminum and organic waste, without causing negative spillovers on adjacent regions. We also find that people are very concerned with PGB ex ante, but implementing PGB reduces concerns with effectiveness and fairness substantially. After implementing PGB, people accept 70 % higher garbage taxes compared to before PGB.

To read the paper click here.