The impact of policy awareness: Evidence from vehicle choices response to fiscal incentives

• Published in: Journal of public economics Vol. 226; p. 104973
• Main Authors: Cerruti, Davide, Daminato, Claudio, Filippini, Massimo
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01-10-2023
• Subjects: Economics; Economics and Business; Ekonomi och näringsliv; Environmental taxation; Fiscal programs; Nationalekonomi; Policy awareness; Samhällsvetenskap; Social Sciences; Vehicle choices; Environmental taxation; Vehicle choices; D12; Q48; Policy awareness; H31; H23; Fiscal programs; D83
• ISSN: 0047-2727; 1879-2316
• DOI: 10.1016/j.jpubeco.2023.104973

Isolating the role of limited knowledge, psychological frictions and policy characteristics is key when evaluating a public program and designing future policies. We document limited awareness about the presence of fiscal incentives towards fuel efficient vehicles. Exploiting a direct measure of awareness at the individual level, we find vehicle choices response heterogeneity to these fiscal incentives between aware and unaware individuals. To estimate the effect of awareness, we leverage a field experiment randomizing information about the mere existence of the fiscal incentives. We show the simple intervention substantially increases policy awareness among vehicle buyers and affects consumers’ vehicle choices. Further, we find increased awareness induces consumers to purchase vehicles that consume less fuel. Together, our findings highlight that limited awareness represents a critical barrier to the effectiveness of public programs.
•We explore the role of policy awareness in the responsiveness to policies.•Most consumers are unaware of fiscal incentives towards fuel efficient vehicles.•We exploit field experimental variation in policy awareness at the individual level.•Informing about the mere presence of the fiscal program increases awareness and influences vehicle choices.•Limited awareness represents a critical barrier to the effectiveness of public programs.