Prices or bans: Understanding public preferences over policy options

Abstract

When a policy goal is set or mandated, e.g., by a higher level of governance, policymakers have a range of instruments to choose from to reach this goal, such as pricing instruments or bans. However, implementation of such policies may fail when they lack public support. We thus study the determinants of public preferences for these instruments in two contexts using a survey experiment with more than 4,000 participants from the general German population. Respondents choose between pricing instruments and bans aimed towards the goals of reducing car traffic in city centers and sugar consumption, while we vary the price of the pricing instru- ment via the newly introduced Policy Price List. In addition, we vary the stringency of the ban, and information about policy effectiveness. We find that preferences over the presented policy options are sensitive to policy design for a large majority of respondents. Higher prices can both increase and decrease support for pricing, while more stringent bans are not necessarily less popular. In addition, perceived policy effectiveness matters: providing information about effectiveness increases support for the pricing instrument. By contrast, moral convictions and trait reactance primarily predict support for the policy goal itself rather than relative policy preferences.