Taboo Trades
Taboo Trades
Paying To Pollute with Hajin Kim
I’m thrilled today to welcome the brilliant and creative Hajin Kim, an Assistant Professor of Law at the University of Chicago. Hajin uses principles from social psychology and economics to study how moral and social influence can shape environmental regulation and firm behavior. She joins us today to discuss her new working paper, Does Paying to Pollute Make Pollution Seem Less Bad? UVA Law 3L, Cyrus Tafti, joins me as co-host on this episode.
Hajin received her BA in economics, summa cum laude, from Harvard, her JD from Stanford Law School, and her PhD from Stanford's Emmett Interdisciplinary Program in Environment and Resources. Before attending Stanford, Hajin worked for the Boston Consulting Group. She clerked for Judge Paul Watford of the US Court of Appeals for the Ninth Circuit and Justice Ruth Bader Ginsburg of the US Supreme Court.
Further Reading:
Hajin Kim bio: https://www.law.uchicago.edu/faculty/kim
Hajin Kim, Does Paying to Pollute Make Pollution Seem Less Bad?
Hajin Kim, "Does ESG Crowd Out Support for Government Regulation?," Coase-Sandor Institute for Law & Economics Research Paper No. 983(2023) (with Joshua C. Macey & Kristen A. Underhill). ssrn cu
Hajin Kim, "Expecting Corporate Prosociality," 53 Journal of Legal Studies 267 (2024). www
Hajin Kim, "Financially Equivalent But Behaviorally Distinct? Pollution Tax and Cap-and-Trade Negotiations," 52 The Environmental Law Reporter 10809 (2022) (with K.C. P. Hirsch). www
Kim Krawiec bio: https://www.law.virginia.edu/faculty/profile/kdk4q/1181653
Kimberly D. Krawiec, Markets, repugnance, and externalities, Journal of Institutional Economics 1–12 (2022).
Kimberly D. Krawiec, No Money Allowed, 2022 University of Chicago Legal Forum 221–240 (2022).
When you came here and did a workshop and I opened the paper and I was so excited. People have been making fun of me ever since then because they're like, I've never seen you so excited about a workshop, including your job, including your own job talk.
SPEAKER_06:Oh, my gosh. That is so that just like warms my heart so much. Thank you. I love that. Thank you.
SPEAKER_03:Hey, hey, everybody. Welcome to the Taboo Trades podcast, a show about stuff we aren't supposed to sell, but do anyway. I'm your host, Kim Kravick. I'm thrilled today to welcome the brilliant and creative Hajin Kim, an assistant professor of law at the University of Chicago. Hajin uses principles from social psychology and economics to study how moral and social influence can shape environmental regulation and firm behavior. She joins us today to discuss her new working paper, Does Paying to Pollute Make Pollution Seem Less Bad?, which is linked below in the show notes and downloadable from SSRN. Hajin received her BA in economics, summa cum laude from Harvard, her JD from Stanford Law School, and her PhD from Stanford's Emmett Interdisciplinary Program in Environment and Resources. Before attending Stanford, Hajin worked for the Boston Consulting Group. She clerked for Judge Paul Watford of the U.S. Court of Appeals for the Ninth Circuit and Justice Ruth Bader Ginsburg of the U.S. Supreme Court.
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SPEAKER_03:Welcome, Cyrus. Thanks for joining me today.
SPEAKER_12:Glad to be here.
SPEAKER_03:So let's start by having you introduce yourself to the audience.
SPEAKER_12:Well, hi, everyone. My name is Cyrus Tafty. I'm a 3L at UVA Law, and I come from Blacksburg, Virginia. So
SPEAKER_03:you volunteered to be a co-host for this episode. What was it about this topic or paper or author that made you want to engage more deeply with this episode?
SPEAKER_12:Well, I wanted to be involved in this episode because of where I grew up. Blacksburg is right next to the New River, which is downstream from the Radford Arsenal, an ammunition production facility that produces explosives and releases a lot of toxic byproducts from that production and disposing of old munitions. A lot of it ends up in the river and air, which come into contact with All the people I knew growing up. So despite this, it was popular to go tubing on the New River during the summer. And in all that time I lived in Blacksburg, it was always fascinating to me the different ways people process the Arsenal's existence and what it meant for them, why they should be concerned, why they shouldn't be concerned. what to make of the frequent news that the arsenal wasn't complying with its permits, what to make when those permits kept getting renewed. So when I saw this topic, it immediately struck a chord as something that I'd be interested in learning more about.
SPEAKER_03:You know, one of the things I love about having you guys be co-hosts for different episodes is I learn so much more about each of you during these discussions. And sometimes I don't want to take anything away from the papers and the authors that we have come, which is great. But I also really enjoy learning more about you guys and what motivates you. So what do you want to learn from her today? We have some questions. Your classmates have some questions. What are you hoping to get out of the discussion?
SPEAKER_12:So last year, I was in a clinic here at UVA that worked on passing legislation. I was working on education policy, so pretty far from this topic. But the experience caused me to really understand how limited the tools of government can sometimes be. So I'm very attracted to the idea that policymakers can shape the way people perceive a regulation based on how it's structured as another tool in their belts. So I'd like to dig a bit deeper with Hajin on what we should do with this information and how we should think about mapping the results of this paper into real-world regulatory changes.
SPEAKER_03:Yeah, I'm really interested to hear from her about that, too. Okay, let's join the others. Welcome, Hajin. Thanks for joining us today. Thank you so much for having me. We are very excited to talk to you about your paper, Does Paying to Pollute Make Pollution Look Less Bad? A Pre-Registered Experimental Test. And first question, is it available for listeners to download yet? I will put a link in the show notes if that is the case. It will be this week. Okay, wonderful. All right. So listeners, I know you will be very excited to read the paper after you hear this and you should go download the paper. So why don't we start by just getting you to tell us a little bit about how the project came about, what motivated you and what you were responding to and what it was that you were hoping to demonstrate with this study.
SPEAKER_06:Sure. So there's been this fight in the literature around market-based instruments. So market-based instruments are things like pollution taxes, cap and trade that use incentives to change behavior as opposed to like a command and control mandate. Right. So this is in this fight since like the 1970s from Steve Kelman's book, and then more recently in the 1990s and in the 2000s and 2010s from Michael Sandel, where the argument is, well, if you let people pay to pollute, it commoditizes the pollution and thereby reduces its moral stigma. So in fact, the market-based instruments are counterproductive because then people don't care as much about the pollution. And it's a really rhetorically powerful argument. It is folks who want to argue against these types of regulations will bring it up all the time. And even though the literature doesn't super focus on it, every time basically, There are economic book chapters or other papers about market-based instruments and the choice of market-based instruments. There's always this mention of, oh, yes, there's an anti-commodification argument. It may reduce moral stigma. This may be a thing that happens. And because it's just been around the literature so long, I thought, you know, this really should be empirically tested. This is an empirical question that is subject to further inquiry. And so I basically randomly assigned participants to learn about, well, I first taught them about a new fictitious pollutant, malzine, and then I randomly assigned them to regulatory condition, a pollution tax, cap and trade, command and control mandate, or no regulation control. And then I tried to say, do they think about this pollution differently under those regulatory conditions? And I basically find no difference across the conditions. And to the extent there is a difference, Tax participants thought pollution was morally worse than command and control mandate participants, which is, of course, in the opposite direction of the anti-commodification critique.
SPEAKER_03:Well, we're going to delve into the specifics of those findings as we go through this episode. I was a little bit interested in the participants in your sample. Who are they and how did you find them?
SPEAKER_06:Yes. So I feel super lucky that I got the sample. I applied to the time sharing experiments in social sciences program, which is this really awesome program where your study gets goes through peer review. And if it passes peer review, they basically allow you to run your study through NORC and NORC. the National Opinion Research Center, they do a really thorough and fantastic job of recruiting a demographically representative panel. And they, you know, they'll even go into people's homes to sort of hook up a computer to make sure you can really get these sort of undersampled populations. And so I felt very lucky that I targeted an over course, over 18, because 18 and over are a demographically representative sample of Americans for the study.
SPEAKER_03:That's great. Okay, I am now going to turn this over to Cyrus, my co-host for the episode, and he's basically going to run everything from here. Great. Hi, Cyrus.
SPEAKER_12:Hi, Hajin. Thank you so much for being here. I wanted to start out with a question on public perception, which is something that your paper focuses heavily on. We know public perception can be shaped by things like advertising or public awareness campaigns. Do you think that any of the methods that you mentioned in your paper, mandates, taxes, or cap and trade programs, can inherently be more resistant to being reframed in a more positive or negative light through such efforts?
SPEAKER_06:Yeah, it's a really great and important question because, you know, my study really evaluates these regulatory instruments in their sort of canonical form. It is called a tax. It is called cap and trade. It is called this limit on pollution. And of course, in the political arena, we see this happening all the time where people who want cap and trade to not go forward, we'll call it cap and tax because there's literature showing people just don't like tax. There's tax aversion, right? But if you want the cap and trade program to go forward, you might call it cap and invest because you can use the revenues from cap and trade to invest in communities or cap and dividend because you can use those same revenues to give dividends to individuals. And so, of course, we know in the real world, there's going to be a lot of of reframing by political actors. It's not clear, to your specific question, if one tool is more or less resistant to framing than the other tools. We know most of the research has been done on taxes and that does seem to be subject to reframing. Like if you label something a fee as opposed to a tax, people sometimes think about that differently. The studies can kind of be mixed, but we do see sometimes differences. I'm not aware of literature on the cap and trade and mandate fronts to see how resistant they are to these sort of political reframings.
SPEAKER_12:Thanks for that answer, Hajin. One of the headline findings of your paper is that market-based regulation does not reduce the moral stigma of pollution. But as you point out, a typical mandate expressly grants permission to pollute up to some level without any penalty, which could lead a layperson to conclude there's a safe level of a given chemical, in this case malzine, that can be released into the environment. Do you think your findings would hold true, even for pollutants the public understands as being dangerous in any amount, perhaps because fines kicked in at any level of omission rather than at some threshold?
SPEAKER_06:Yeah. So this is another really interesting question. So the bottom line is, I think my findings would be, I mean, it's hard to say that I find something like a null effect. It's hard to say a null effect would be even stronger, but I basically think it would be an even stronger null effect if this were a much more dangerous pollutant. Because if you were to say, look, this thing is going to kill everybody upon contact, then everyone's going to say it's super morally bad. And you get in sort of a ceiling effect. If it's on a scale of zero, you're at 100%. And this pollutant kills everybody on contact, everyone's going to see it's 100 morally bad to emit this pollutant. And so you don't get any differences. And because I was so this was a pre registered study, I was making a prediction based on my theory that there might be something like a null effect. So what I wanted to do is give this the sort of anti commodification effect, the best possible chance of finding this difference of finding a reduction in moral stigma from the market based instruments and the tax. And to do that, I wanted opinion to be much And so I didn't want the dangerous pollutant. I wanted a light touch pollutant that caused, you know, I said asthma, not cancer and like harm to plants. Right. Because then I thought opinion might be more elastic. People won't all just congregate at the 100 of the scale to say this is super, super, super bad. But, yeah, I think if it were a much more dangerous pollutant, probably people would just say this is it's immoral. Like we just think something that's going to kill people a lot is morally bad.
SPEAKER_03:I just want to say, having talked to you twice now about the study, how much I really have come to appreciate the care that you took to, in some ways, make the best case possible for your opponents. Oh, thank you. You know, it's taken me some time to really appreciate how much work you did on that. And I hope that readers will appreciate that as well.
SPEAKER_06:Thank you. I don't think of them necessarily as my opponents, but I guess they are sort of my, like, You know, we're lawyers in an adversarial
SPEAKER_03:system. Fair enough. I think of them as my opponents, but I'm projecting here. Thank you. I really appreciate that.
SPEAKER_12:Next up, we have a question from Lauren, who's going to ask about the perspective of regulators themselves.
SPEAKER_08:So you mentioned that importance of populations might be too small to adequately capture in your sample and identify regulated entities as a potential future research subject. So I'm curious, as Cyrus mentioned about regulators themselves, because the demography of lay Americans isn't necessarily the demography of groups creating and implementing environmental legislation. And those groups arguably don't fully represent the policy preferences and moral stigmas of their constituency. So analyzing those regulators' moral stigmas might provide deeper insight into reactivity to different regulatory frames for use analyzing on the ground policymaking. So as a potential direction for future research, how would you model politicians, legislators, et cetera, as a subpopulation? And what, if any, subpopulation effects would you anticipate from that sample?
SPEAKER_06:This is super important and very interesting. So I think it could swing in either direction. So one of the things I do in the study is I try to tease apart different channels through which, like in psychology, we call it mediation paths, through which we would see essentially this null effect on moral stigma. And one of the channels is an expressive effect from the government. So if the government says, we're going to put in place a pollution tax or a cap and trade, the sort of received message could be, oh, the government doesn't think this is that big of a deal because they're just doing a tax or a cap and trade, and that's not maybe the most effective instrument. And so maybe this pollution isn't that big of a deal. The expressive effect might make people think, oh, I'm not as concerned about this pollution. And I find that this effect, the influence of what you think the government thinks on what you believe, that association, it's not totally causal. It's a correlation. That association is stronger, unsurprisingly, when you trust the government more. So this can go in either direction. So if you are a regulator yourself, you might think you might trust regulators more because you are among the regulated entities, in which case this expressive effect might be stronger. But you might also trust regulators less right? Because you are seeing how the sausage is made. You may also sort of recognize, oh, in fact, this choice is not a signal of how dire the situation is. It's maybe just a choice because we listened to the economists or because this is what we were able to get through politically. And so you could see this effect go in either direction. And I think the best thing to do would just be to test this, right? Because we don't know. But it's a great question and a really important point to sort of say, well, how would this change how the regulators themselves think about the problem? You would especially not want their view of pollution to change in response to the regulatory instrument they themselves choose.
SPEAKER_12:Thanks for that answer. Our next question comes from Alexa, who wants to ask about how cultural and political differences might affect these regulations.
SPEAKER_00:Hi, Ajin. Thank you for being here with us today. So given that your study focused on a sample of Americans, how do you think cultural differences, political beliefs, or government structures in other countries might influence the perception of market-based pollution regulations? And how do you see these differences, such as more trust in government or environmental commitments, impacting such policies on an international scale?
SPEAKER_06:It's a really great question. I really, and I wish I could answer. My strongest answer is, or like my strongest belief is like, we just can't tell because of course these cultural and political differences will, will have effects. So for example, you know, we are now starting to see that the polls saying that more, more and more Americans are sort of open to market-based instruments. But at the same time, you know, in 2016, 2018, referenda in Washington to put in place carbon pricing base just failed. And Washington's a pretty blue state, right? And yet we have carbon prices that, on a national level and in many other countries around the world, we have 70 of these instruments in place. We have some, of course, in the US and California, Reggie and so forth, but it seems much more politically difficult to achieve. And so my strong intuition is just that there are going to be differences across cultures. I will say that with other parts of data from the same project, one thing I looked at was this sort of not the moral stigma of pollution, coming from the regulations, but this preference for different market-based versus mandate tools. And I find that people in my sample strongly preferred a mandate to the market-based instruments. And that is also the finding that came out of a recent Pfizer-McGrath 2023 paper looking at New Delhi and Beijing. So there might be some commonalities that we see across populations, but we would just have to test it.
SPEAKER_12:Thanks for sharing that. It's interesting that there's some amount of consistency across cultures. Our next question comes from John Henry, who wants to know about the reputational incentives for companies.
SPEAKER_11:Hi, thank you so much for joining us today, this morning. So I wanted to shift from kind of these questions on samples and study design to your findings. And one of your sub findings is a key issue for encouraging compliance. You found that companies do not have a reputational incentive to comply with a market-based instrument if they will be morally judged for polluting no matter what they do. What does this finding suggest about the way in which we analyze pollution as a market failure?
SPEAKER_06:Yeah, it's a great question. So just to back up and explain for listeners what the finding was, thank you for giving me that opportunity. So one of the critiques of market-based instruments is that it licenses some pollution. And that seems like an unfair critique because as we mentioned earlier in the conversation, lots of performance-based mandates, command and control mandates also license some level of pollution. They basically say under a certain level of pollution, that's okay. Like you have an effluent limit or emission limit, which means under that limit, you're fine. And so I thought a more sort of, apples to apples horse race would be testing more cleanly what I call compliance morality and violation morality. So if you are in compliance with your tax, you're paying the tax for all the pollution you emit. With your cap and trade, you're buying the credits for the pollution you emit or the mandate. You are polluting at or under the limit from your command and control mandate. How do companies doing all those three things compare to each other in terms of how moral or immoral people perceive them to be. And the same on the violation morality. So if you are polluting more than you're paying taxes for, or than you're getting credit for, or more than the set limit, how bad do you look? And my prediction was, and for all of these, I basically set the companies to be equivalent. So they were all polluting, I think, at 10 tons in the compliance morality, which is the limit, and they were paying for it all in the tax and the cap and trade. And in the violation morality set of questions, they were polluting 13 tons, which is above the limit and more than the 10 tons that they were paying the taxes for and cap and trade credits for. And my prediction was, look, because the government is expressing that under 10 limits is categorically okay in the mandate condition, you're probably going to look more morally good for complying with a mandate in that condition, for complying with the instrument in that condition. Whereas you're constantly, there's no categorical limit in the tax and cap-and-trade condition in which it seems like the government is saying you're okay, where they are implicitly licensing it, it is legal at those limits, at those amounts, but it's not saying there's something morally okay better about being under some number in the market-based instrument condition than in the mandate condition. And as you mentioned, what I find is in the mandate condition, the majority of the sample basically felt like agreed that a company at or under the mandate was morally good and disagreed that companies including the exact same amount under a cap and trade or pollution tax was morally good. They thought those companies were morally bad. And so your question is, well, if you're under a market-based instrument, you're going to look morally bad even when you're complying. And so doesn't that reduce the sort of reputational incentive to comply with the law? And I think that's definitely true and kind of a cool, interesting new argument against market-based instruments, right? Like you're not getting that reputational incentive. How this changes the way we analyze pollution as a market failure really depends on a host of other considerations, right? So on the one hand, if you think that your regulations are not perfectly aligning incentives, and so in terms of, you know, there's still an externality left even after the regulation is in place, then you're going to want... you're basically going to want your, there to be some moral stigma to like push people to, and some reputational harm to push people to do even more than what they're doing, right? So in this case, maybe it's on the one hand, it might be good that in the market-based instrument, you don't look good for complying because we, in fact, need companies to do more than just comply, right? And so we want some reputational incentive to push them to beyond compliance, to do even more, to reduce their pollution even more. But on the other hand, if that reduces their incentive to comply with the instrument at all, that could be itself really problematic. And so it just kind of depends, like, how strong is that reputational incentive and how much and how does that change firm behavior?
SPEAKER_12:Great. Thank you. I think we have a follow-up question from Tanner on the same subject.
SPEAKER_13:Yes, this is very much along the same vein. But as you just mentioned, under a market-based instrument regime, companies can look worse to the public by complying with these pollution standards and paying for it. But under these same regimes, assuming that these market-based instruments give companies more discretion in how to limit pollution in a manner that's optimal for them, this might allow them to run their business in a more economically efficient manner. Do such economic efficiency benefits outweigh the cost incurred on a company's goodwill under this market-based instrument regime?
SPEAKER_06:It's a really good question. And of course, that is the major argument for market-based instruments, that they are more economically efficient. So if it's very costly for Firm A to reduce its pollution, in response to a market-based instrument, it might just pay for the tax, whereas Firm B, for whom it is very cheap to reduce their pollution, will reduce their pollution more in response to that price incentive. And so essentially, the market helps find the cheapest cost abaters, right? So where in the market it is cheapest to reduce the pollution. And so we get pollution reduction, we as a society get pollution reduction at a lower cost. Whether or not the additional, the lack of compliance reputational benefits from the market-based instruments that we see, whether or not that will outweigh those economic efficiencies. I'd be very surprised if they do, but it's definitely an empirical question. How much goodwill is lost and how does that goodwill translate to firm behavior? We don't know. Also, it's going to depend on the specifics of the market structure. If you have a fully homogenous market where all the firms face exactly the same abatement costs and you don't get that much benefit from the for firms to figure out how to reduce their pollution either. So it's really just going to depend on the specifics of the situation.
SPEAKER_12:Thanks for that answer. Next, we have a question from Nia about the implications of changing views on ESG.
SPEAKER_04:Yeah, good morning and thank you for coming to speak with us this morning. In your article, you note that complying with a market-based instrument does not make a firm look morally good, but complying with a mandate does. Yet the impact of ESG on business reputation is said to be in a decline. Does the change in opinion on ESG have any implications for your study's findings or the use of MBIs going forward?
SPEAKER_06:I love this question. So I have essentially two streams of research. One, which I'm sure there's no reason any of you would know, one is on market-based instruments and one is on ESG. So this was, I love it. So thank you. I really think it just depends on the situation for the reasons just discussed. It's going to depend on how much you need reputational incentives. I think your question, though, on the decline of ESG and the decline in potential influence of reputation on firm behavior writ large has broader implications for the study, just the motivation for the study and the study itself, right? So my theory for why moral stigma matters is we are in a second best world where we are not perfectly internalizing externalities, even with our current regulation, and regulations tend to be under, they tend to even when you have a regulation in place, they don't tend to do enough to internalize externalities. And so the point of having moral stigma is to get us closer to a perfect internalization of externalities by adding additional costs to the pollution. And the channels for moral stigma can go in two ways. So I am just testing up to the point of like, how does this change lay perceptions of moral stigma? But then why would moral stigma matter? either because moral stigma encourages people to go to the government and say, we need better regulation, the government channel, or two, because it encourages, or I guess there's three, but two, it could encourage individuals to go to the companies themselves in this sort of ESG voluntary corporate sustainability framework to say, hey, company, X, you know, I'm your consumer or I'm your employee or I am your investor and I think you really should reduce pollution more because it's something that I care about and I feel like you're not doing enough. The third channel is, of course, personal behavior, but we'll set that aside. So if we have a decline in ESG and if these reputational incentives go down, then we also see a corresponding decline in that second channel where there's just going to be less influence by everyday citizens on the firms to begin with. And so maybe moral stigma just matters less for that reason.
SPEAKER_03:I'm surprised I never thought of this before, although, as you and I have discussed, I don't do environmental stuff because then I would have to learn something about it and it seems hard. But this discussion of moral stigma strikes me as being very, very distinct from most of the other areas where commodification arguments are raised. Because here, moral stigma, as you've just pointed out several times now, is a useful tool for controlling an externality. Whereas even people like Sandell or other strong corruption theorists as people who worry about commodification, I do not think, believe that it is socially useful or good to stigmatize plasma donors or surrogates or the children born from them. Even if they think those things shouldn't exist in the marketplace, I don't think that there's the same role for stigma.
SPEAKER_06:No, this is absolutely true. And it's so interesting because Martha Nussbaum and I think it's Dan Kahan have a big back and forth on the role of moral stigma in general because Martha Nussbaum is, of course, coming from this sort of, oh, you know, stigma has for so long really been this irrational burden that marginalized people have to bear. And so moral stigma in her mind is bad. It's like we stigmatize lots of things that are coded as feminine and that doesn't help society. Or
SPEAKER_03:that poor people do. Right,
SPEAKER_06:exactly. And so the stigma is irrational and unuseful. It doesn't help move society forward. Whereas Dan Kahn is very much coming from the pollution context where environmentalists very much want to leverage the fact that people are kind of don't really like pollution in order to get better regulation because we are, we so often do not do such a good job in our regulation. I mean, Clean Air Act, Clean Water Act have been huge successes, but we still have ways to go, right? So it is super interesting seeing how people just coming from different backgrounds in thinking about moral stigma have just completely different sort of initial gut reactions to like, oh, stigma is bad versus, oh, stigma is useful.
SPEAKER_03:Yeah, yeah, exactly. Thank you.
SPEAKER_10:I love it.
SPEAKER_12:Our next question comes from Alyssa.
SPEAKER_10:Good morning. Thank you so much for being here. My question is, it kind of stems from the it's fine a price literature and its relationship to your study. And I particularly was interested in the discussion of the possible expressive effects of the choice of regulatory instruments. In your paper, you specifically state that a law commanding emissions reduction signals moral disapproval, while one allowing entities to pay to pollute might suggest that pollution is no big deal. But most of the time, at least the initial punishment for violating a mandate is usually actually a price. That is, it's a fine. And a speeding ticket usually is a punishment for violating a mandate, but it's also the price of speeding. Under either framing, it signals moral disapproval to me. Your manipulation... didn't specify the penalty for violations. Would it have mattered if it did?
SPEAKER_06:Yeah, this is a great question. And you're really getting at the... It's funny how people, just going back to our prior discussion, how people have such different reactions to the assertive assumptions in this project, because I think a lot of people will say, so you're saying, well, okay, so it is a price in either case and the price itself signals disapproval. Other people, like a real pure economist economist might say, it doesn't signal disapproval. It's just the price for the behavior. And you just have to decide whether or not it's worth it to me. It's part, you do a cost benefit analysis. Is it worth it to me to speed and, and you know, there's an expected value that I will get caught and have to pay a speeding ticket. And that's how, like, there is no moral disapproval. It's just a pure price that I think about in my sort of, like, will I be deterred by this discussion or by the regulation? I did not specify a penalty for the violations because what I really, really, as I mentioned, wanted to give the anti-commodification critique the greatest chance of finding this reduction in moral stigma. And specifying a penalty, just like you said, might suggest to people that it is a price and put it into the sort of price market bucket. And if so, then what I would be doing is comparing, yeah, something like a command control mandate, but something with a market element because there's a price attached to it to another price. And so that would dampen any difference between the two. And I wanted to make sure if there is a difference that I could really highlight that and bring it out. So I didn't do that. And my sort of intuition is if I did specify the price, I would still get a null effect for that reason, right? Because then I'd be comparing it. Like for some people, it'd be just a price to a price, right?
SPEAKER_12:Thanks. Next up, we have Tanner with a question about the choice of malzine as the pollutant in the paper.
SPEAKER_13:Yes, I think this might have been somewhat addressed in one of Cyrus's questions in the beginning, but I'm just, again, kind of asking to speculate on some results here. So your study uses malazine, a new fictitious pollutant, and in the paper you explain why you made this choice to avoid some fixed opinions about specifically known pollutants. But you also mentioned that a limitation of the study is that people's moral views about the harms of pollutions can be generally fixed. So trying to address both of these Could you speculate on how the results of your study might differ if the pollutant question was a pre-existing or B, even if it was fictitious, if it was one with greater potential harms than what people already know or perceive about pollution to do to the environment?
SPEAKER_06:Yeah. So I think that the real question sort of elephant in the room is like, why not use greenhouse gases or methane or. or carbon dioxide, you know, something that relates to climate change because that's what everyone cares about and is worried about at the moment, or something super, super bad, right? And the reason I didn't go either of those routes is because people already have these pre-existing strong opinions on climate change, and so then it's going to be very hard to move around opinion. And the fact that I don't find a difference would sort of mean, okay, it's because no matter what the regulatory tool, people think climate change is bad, right? So it, again, doesn't really give the anti-commodification critique the greatest chance of eliciting opinion difference. And the same thing with the, if it was greater potential harm, I worry again about the ceiling effects. And so basically the reason why, my speculation would be if I tried it either with a known pollutant or with something, a pollutant with much greater harms, I would find similar effects. Basically no difference between conditions. What could be interesting, and I thought about a little bit, is what about something that's known but much lighter touch? So something like noise pollution from lawn tools or something like that. I didn't try that, but I think that could be very interesting because that too would hopefully be able to elicit more of a difference just because it's known, but at least people I think may not have super fixed opinions about it yet. That's one possibility.
SPEAKER_12:Gotcha. Thanks for that answer. Next up is Laura with a question about study design.
SPEAKER_07:Hi, Hajin. So your study was a survey of people you know, in the current instance, imagining a tax or a cap and trade regime. But as you briefly mentioned in your paper, perhaps the effects on moral stigma might only really be seen after these market-based instruments are actually enacted and pollution as a commodity becomes more normalized, that we start to really see a reduction in moral stigma if we see one at all. So I'm just curious how serious of a limitation do you think that is? And even though you didn't mention it in your study, would you be willing to speculate on that? Or alternatively, do you think it's possible to test that in a future study at all?
SPEAKER_06:Yeah, so this is a great question and a great point. And I think it is a big limitation in the study. So it's really hard to speculate, but my speculation would be if I were to pick up an effect, I would think if it were to be like, you know, Just an effect that happens from repeat exposure over time. I would think that what I pick up from the immediate exposure at least would pick up a trend in that direction. And everything I see so far trends in the opposite direction. Right. Now, it's possible, of course, that like there is something just people just react completely differently. Right. over time than they do in the initial reaction. And so I think there are ways to test it, but they're not perfect, right? So the two ways I would try to think about testing it is one is just a cross-sectional, like see how much experience people have with a particular market-based instrument and then see what they think about the thing that the instrument is trying to test and see are there differences across those people. Now that's not a causal story. That's a correlational study, but it helps give you like a little bit, it's like one hand on the elephant, right? It's just like a little bit, it sheds a little bit more light on the issue. A second thing that people have done is they've done these sort of repeat measure studies where you, for example, you'll play a common pool resource game and you'll play it, you know, 10, 20 rounds and you try to see like, okay, by the 20th round, are there differences that weren't elicited in the first round? It's a little hard to think about how to do that in this instance, because to do that, you sort of put people in an even more artificial setting and you're playing a game to try to get a resource. So I don't think that's necessarily perfect either. So I guess to more directly answer your question, I think it's a limitation. I'm not totally sure how to test it. And even though I think it's a limitation, I'm not sure that it is... I think if somebody came up with a better way to test it, it would be super cool to see. But I am not super concerned that this would change over time that drastically.
SPEAKER_12:Thanks for speculating on that with us. Next up, we have a question from Alyssa on the distinction between the reactions to market-based instruments.
SPEAKER_05:Thank you, Cyrus and Hajin, for answering our questions so far. So my question kind of goes to the question. conversations we've had throughout about morality. So it's, are we able to disentangle any possible moral outrage over perceptions of the regulation as a punishment versus a reward from the related but different issue of commodification? Essentially, reactions seem to be based more upon whether they think companies are being punished for polluting or being rewarded. How much of a role does the perception of punishment versus reward play here, if any, as compared to the idea of commodification?
SPEAKER_06:Yeah, this is really interesting. The literature on these instruments on pollution taxes, cap-and-trade, and mandates generally characterize them all as sort of push... push regulations, whereas you have full regulations that are more like subsidies. And subsidies, in my mind, are more like a reward, where they're saying, like, you're going to do some environmentally good thing. You plant some trees. I'll pay you money for that. Or you're a farmer, and you're going to conserve your land in some way, so I will pay you money for that. And so I think of all three instruments, actually, as more in the punishment category than the reward category. But maybe you're thinking about them a bit differently. I do think in the reward category, things might be very different. We know that the way people think about punishment versus reward is quite distinct. And so there might be stuff happening aside from, as you say, aside from the commodification issue that I think it would be super interesting to explore. So one thing I've thought about is There's a lot of conservation programs for farmers, and it'd be really cool to see if you're paying a farmer to conserve, if that ever increases their environmental identity at some point. Because what we know in other research is when you do something for somewhat like a selfish and an altruistic reason, you tend to tell yourself it's because of the altruistic reason that you did it, because you want to think well of yourself, right? So there's a study showing when charities give a tote bag or whatever they give in exchange for the donation, people tell themselves it's for the, it's, it's not for the tote bag. They gave the donation because they're in fact a good person. And so what they show is in follow-up studies, people will, even without the tote bag, people will be more likely to donate than they would if they, there had been no tote bag to begin with in the first instance, right? So it can kind of teach people to be moral people. And so it'd be really cool to see like, does that happen in this context of rewards in environmental rewards and subsidies? But I, you know, it's a, as you say, the distinct question and not one I've yet studied.
SPEAKER_03:Alyssa, do you want to elaborate at all on why it looked like potential rewards versus punishments to you? I
SPEAKER_05:think it was just like whether people understand like the phrasing of how the thing is presented. So if it's essentially getting at the same ends, but it's just the way it's presented and how people understand it. Like if you, throw down the bottle in a national park, but you paid to be able to do that versus you throw down the can and then you're paying the fine for the can. It's getting at the same thing. You paid for it either way. So I just think it was in the presentation. I see.
SPEAKER_06:I see. Right. So I think this gets to the core, actually, of the anti-commodification critique, though, because one of the cores, there's multi... Faceted critique. But one of the cores is like, look, this the tax and cap and trade regime is inherently licensing something. It's allowing something that we think is bad. But of course, my sort of counter to that is so is the command and control mandate, unless you have a full ban. then the command and control mandate is licensing, allowing some level of pollution as well, right? And that level of pollution is totally fine. It's distinct from the... So I think Michael Sandel also likes to use the littering example, but in the littering example, we, of course, have a full ban, right? We say you cannot litter. And so that's confusing the instrument type, market-based instrument versus mandate, with the stringency. Like, is it a ban? You could also have, you know, a de facto ban from a tax that is just so, so, so high. Like, it's a million dollars every time you... you throw a can down, I guess like Elon Musk could throw the can down. But like, you know, most people would not be able to throw the can down. And so I think that really does conflate instrument stringency with instrument type, which is why I tried to use, separately test compliance morality and violation morality.
SPEAKER_12:Thanks for that question, Alyssa. That helped draw the distinction out, at least in my head. Next, we have a question from Liv about the potential influence of age on responses.
SPEAKER_02:Hi, Hajin. Thanks again so much for being with us. So I'm particularly interested, you know, from an experimental design perspective in the age-related trends with respect to your study. So kind of what I mean by that is I personally find that attitudes about environmental regulatory issues have shifted over time and will inevitably continue to play a role in regulatory policy as younger generations naturally come to have more of an influence in the decision-making process. So Did you examine your study sample at all to see if responses and age had any association? For example, I know you use moderators of environmentalism and government trust and how people felt about that. I just feel like there might be some patterns with respect to the ages of your participants and how they feel about the government, environment, pollution, certain ESG initiatives. So I'm really interested to hear your thoughts on that.
SPEAKER_06:Yeah, this is a fascinating question, and I'm so glad you called it out. We know from some of your other professors, of course, at UVA that there is like a strong effect of millennials in terms of pushing ESG. And it's also just like all over the news, right? We know Greta Thunberg, for example, was catalyzed a whole movement of young people who are basically saying we need to do something on climate. And so you would expect to see something like on age in here. But surprisingly, you know, I got your question and checked the data and I don't find the relationship that I think you were expecting. I see a statistically significant relationship between age and environmental identity, but it is slightly positive. It's a very slight positive. So I would say it basically doesn't matter. But to the extent there is a trend, essentially as people get older, they report, self-report to feel stronger, that they have stronger environmental identities. And I see the same thing for age and trust, which is a very slight positive relationship. As people get older, they report slightly more trust. But here, what's really interesting is I did a cut of data where I said, well, does this differ by political party? And it does. So if you're Republican, you trust the government less as you age. And if you're a Democrat, you trust the government more as you age. And so we could be seeing other sort of differences like that coming through in the data that maybe I I just need to spend more time with it to bring out. But it's a really interesting question. Thank you.
SPEAKER_03:Did that surprise you, Hajin? My intuition would have been the same as Liv's.
SPEAKER_06:Yeah, I think. So I also did a cut on, I don't think there was enough influence on moral stigma of pollution either, which is where I would have expected to see the greatest influence, right? Because I would expect the younger people would be most likely to say something like, this pollution is really, really, really bad, right? Now, it's possible that it's because it was a fake pollutant. So everybody was kind of and I told everybody it was asthma and harm to plants. So it could be that what we actually see in the real world is young people saying, oh, my gosh, look at Hurricane Milton. Look at, you know, look at the recent droughts and the massive heat wave in the southwest right now. And they're really keyed into like all of the harms of climate change in a way that the older generation is not. But if you tell them all, OK, like. If you told everybody in a sample, these hurricanes are happening. Climate change is making them much worse. They're making the oceans much worse. Now, how bad do you think it is? Maybe people would level level set kind of. And I think that might be what's happening in the sample. The other thing is like some of the measures are things like, you know, I would not be embarrassed to be seen as an environmentally friendly consumer. And maybe that's just like not the kind of measure that that best works. picks up on what we sort of see happening with the youth versus older generations in environmental movements.
SPEAKER_03:Yeah, that makes sense. Thank you.
SPEAKER_12:Next up, Anthony has a question on public understanding.
SPEAKER_09:Yes, thank you. So environmental pollution is complicated, and mostly people are unlikely to understand the workings of different regulatory instruments within its context, even with the simplified explanation provided in your manipulations. It's speculation, of course, but do you think the results would be the same under a different setting? For example, the carpooling example you used in your paper or kind of calling back to what we discussed earlier about noise pollution?
SPEAKER_06:Yeah, so this is a great question. I was very worried about this. Especially cap and trade, I think, is very hard for people to understand. It's not something most people are thinking about. And so what I did is, in order to design the explanations for the tools, I Pulled from major newspaper descriptions, and then I simplified still further so that everything, every explanation was at least at a 10th grade reading level. And then I only took as my participants. I ended up cutting out, I think, like 300 or so of the 24, 300 to 400 of the 2400 participants I got who failed everything. any one of my three attention checks that were there to sort of make sure they understood the instrument. And this was, again, to give the anti-commodification critique the greatest chance of finding a result because, of course, you're going to have a null result if nobody understands what the instruments are because the instruments are not moving you at all, right? And so I hear what you're saying. in the sense that this is confusing. And so maybe things would be different if it was a less confusing scenario. But I do think I tried to maximally reduce confusion and just study the people who were who at least appear to be not confused about it. Your question on like, would this be different if it were a potentially simpler scenario like carpooling or something that people have maybe more everyday experience with? I mean, it's a really interesting question. So I try to study observers as opposed to regulated entities. And I think that would be another major distinction between looking at carpooling, right? Because I would be asking people about something they probably do in their everyday life. Like when you think about how regulated entities respond, it's going to be different from how you think observers may respond.
SPEAKER_12:Thanks for that answer. Our final question today goes to Kimberly.
SPEAKER_01:Yes, good morning. Thank you so much for joining us today. I would like to return to Alicia Marshall's earlier question. Critics often argue that the environmental regulations, including paying fines under a mandate, is merely treated as just another cost of doing business. Your study is about late perceptions, but Does it contain any insights for the views of polluters themselves? Are there arguments that the form of regulatory instruments shifts perceptions of wrongfulness, or is the focus only on how they respond to public perceptions of morality?
SPEAKER_06:Yeah, so my study only looks at observers, which, you know, is because I'm thinking, okay, lay public, how can they influence government? How can they, like, you know, lobby the companies directly? and maybe how they'll change their own personal decisions. Although, of course, this doesn't quite get into that because I'm looking not at the regulated entities. It's really hard to say how regulated entities react because I can see it going in either direction, right? Now, on the one hand, if we're really thinking, okay, these are the regulated entities. And so the big difference here is there might be some motivated reasoning where it is costly for them to reduce their pollution. And so they're motivated to sort of reason, for why they shouldn't have to reduce pollution, right? So on the one hand, the mandate is more coercive and that could prompt like greater reactants on the part of regulated entities. They could be like, wow, gosh, they've really put the brakes on pollution here and they've got this wrong. Pollution is not this bad. They shouldn't have put the brakes on this hard, right? So you could see regulated entities sort of in response to the mandate thinking pollution is not so bad. But you could see the same thing happen with taxes and cap and trade because they so clarified the price to pollute. And so they could say, gosh, this is so expensive. I shouldn't have to pay this much to pollute. This pollution is not so bad. And again, that would also dampen the sort of moral stigma that they may attach to the pollution. And so it's hard to say which one would dominate in this instance, right? But it's Really interesting question. I wish I knew the answer.
SPEAKER_03:Hachin, I just wanted to follow up on this a little bit. It made me wonder about the commodification critique and how it's typically framed here. In my world, right, the commodification critique is normally one that is both about paternalism and externalities. In other words, sex work is degrading to the parties to the transaction, but more importantly, it's degrading to society at large. So the commodification critique here, is it that as well? It is aimed both at observers and at regulatory entities and regulators. I mean, so how is it envisioned in this setting?
SPEAKER_06:I think it is a little bit all of the above. So there is a sense, oh, okay, so there's a sort of This degrades the sacred. It basically says pollution is something that can be bought and sold. And the sacred here is, of course, the environment, which should not be commoditized in that manner. And so there is that sort of just like these things don't go together moral sin. Right. And it changes the way we interact with the environment because because of that. There is also kind of a hidden line of like, oh, this is going to change regulated entities because they will treat it as a cost of doing business. And so they will they themselves will also change. And so I think the anti-commodification critique does go to both like society at large or sort of observers and the regulated entities themselves.
SPEAKER_03:Okay, great.
SPEAKER_06:Thank you. Cyrus, any last
SPEAKER_03:minute thoughts?
SPEAKER_12:Just thank you, Hajin, for taking the time to speak with us today and answering all of our questions. Really appreciate it.
SPEAKER_06:These are so fantastic. It's really pushing me to think more about this project and future projects coming out of this. So I so appreciate your taking all this time and thought and care with my work. So thank you. And thank you, Kim, so much for inviting me. I know, you know, when we first talked about this, I was just like, yes, I can't wait. So
SPEAKER_03:thank you. Well, it was great to see you. Thank you for doing this. Thank you.
