91ÇàÇà²Ý

Title of the thesis: Essays on climate policy and transportation

Doctoral student: Arttu Ahonen
Opponent: Prof. Moritz Drupp, ETH Zurich / University of Hamburg
Custos: Prof. Matti Liski, Aalto University School of Business, Department of Economics

Road transportation is a major source of global carbon dioxide emissions, and a particularly difficult-to-abate sector, requiring a mass of individual consumers to invest in cleaner technologies or reduce their kilometers driven. In principle, carbon pricing can deliver abatement cost-effectively by incentivizing individuals to adapt in whatever way they deem least costly, but the costs are widespread, unevenly distributed, and notably salient, leading to political difficulties and fairness concerns.

This dissertation consists of three essays that build on exceptional microdata on individual car ownership and kilometers driven from the Finnish vehicle registry to empirically assess these distributional and political challenges as well as the potential of less contentious place-based policies – e.g. transit investments – to influence individual driving decisions.

The first essay exploits uniquely detailed demographic information to describe who pays fuel taxes in Finland, and how predictable tax burdens are at the household level. The second essay links this data with a government-backed large-scale survey to assess if targeted compensation can increase support for fuel-price-increasing climate policy by appealing to voters’ self interest. The third essay uses a long and granular panel of residential locations to study how people adjust their driving when moving between neighborhoods, and how current habits are shaped by neighborhoods where people grew up in.

A key theme uniting the results of the essays is that individuals are highly idiosyncratic both in their driving habits and their willingness to pay for reducing transportation emissions. This makes it difficult to address unequal burdens or increase the acceptability of carbon pricing by targeting compensation, and cautions against relying on place-based investments as a primary climate tool. On the other hand, driving habits are relatively well explained by childhood neighborhoods, while transit access is among the strongest predictors of acceptance of higher fuel prices, suggesting that investing in alternatives for driving can deliver in the long term by shaping habits, while also making carbon pricing less costly for voters. In aggregate, people are also surprisingly willing to accept higher fuel prices to reach emissions goals, and equal lump-sum compensations can be used to gather more support and ensure progressive distributional outcomes in the short term.

Thesis available for public display 10 days prior to the defence at:

Contact information:

Arttu Ahonen
arttu.ahonen@aalto.fi