A carbon tax is widely accepted as the most effective policy for curbing carbon emissions but is controversial because it imposes costs on consumers. An alternative, the nudge approach, can influence the choices people make with much lower costs. However, there is a pernicious indirect effect if people realize the promise of a ‘quick fix’ and become less supportive of policies that bring a greater impact.
Fortunately, the disclosure of information does not diminish the support for “nudges”, we can use both tools appropriately at the same time and should be mindful not to weaken the implementation of the carbon tax and undermine its impact.