Behavioral Effects of Carbon Pricing: Experimental Evidence on the Demand for Fuel
Carbon pricing is a key policy tool for mitigating climate change by increasing prices and thereby reducing demand for carbon-intensive products and activities. However, behavioral effects -- such as crowding-in or -out of intrinsic motivation, moral licensing, or defiant behavior -- can either amplify or weaken its standalone price effect. This study examines the behavioral effects of carbon pricing on the demand for fuel using a multiple price list approach in an incentivized online survey experiment, which was conducted in 2024 in Germany in a general population sample of 2,600 participants. The findings suggest that carbon price salience crowds in intrinsic motivation on average compared to a situation in which carbon pricing is in place but less salient, reinforcing the price effect. In contrast, in certain subgroups this salience weakens the price effect and tends to even increase demand for fuel due to crowding-out of intrinsic motivation and moral licensing.