University of Pittsburgh
July 11, 2016

Pitt’s Cait Lamberton Wins Best Conference Paper Award

Lamberton and co-authors researched consumer behavior and responses to Pigovian taxes
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Katie Fike

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PITTSBURGH—Cait Lamberton received the Best Conference Paper Award at the American Marketing Association’s 2016 Marketing and Public Policy Conference in June. Lamberton is the Ben L. Fryrear Chair of Marketing and an associate professor of business administration in the University of Pittsburgh’s Joseph M. Katz Graduate School of Business.Cait Lamberton

“Will I Pay for Your Pleasure? Consumers’ Perceptions of Negative Externalities and Responses to Pigovian Taxes” explores consumer behavior and responses to Pigovian taxes. Lamberton’s co-authors M. Paula Fitzgerald and Michael F. Walsh are faculty members in West Virginia University’s College of Business and Economics.

A Pigovian tax is a tax levied on any market activity that generates negative externalities. The tax is intended to correct an inefficient market outcome and is set equal to the social cost of the negative effects of a certain behavior (i.e., smoking, consuming fast food, and drinking sugary soda).

“Basically, we all recognize that our behavior affects ourselves. That’s an ‘internality.’ But when we believe that our behavior creates costs for others, we believe in ‘externalities.’ Some people believe in them; some people don’t,” said Lamberton.

Lamberton’s research findings suggest that policymakers may want to reconsider their approach to imposing the tax.

“In our recent paper, we learned that people’s attitudes toward these taxes depend on a fundamental belief about the way the world works. Our data indicates that people who think these taxes are unfair may be Democrat or Republican, young or old, male or female. Policymakers who try to beat them over the head with a Pigovian tax will fail because they’re not addressing a root issue that underlies its rejection,” said Lamberton.

Lamberton said that one way to nudge healthier behavior is to reframe the price differences in beverages as rewards for good behavior rather than punishments for damaging behavior, meaning that consumers who choose to buy a less sugary drink will receive a discount.

“While mathematically, this could work out to exactly the same price levels, allowing people to feel that they could be rewarded for good behavior seemed much more fair and more acceptable to our respondents, regardless of their belief in externalities,” said Lamberton.

“The reward associated with a less unhealthy option may be enough to nudge us toward a new habit, while helping to fund a healthier society at the same time.”

The paper was published in the July 2016 issue of the Journal of the Association for Consumer Research.

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