Downward comparisons enhance carbon credit policy sustainability: Lab evidence

Carbon-inclusive policies that modify daily activities are crucial for reducing emissions. The Credit Charge-cum-Rebate (CCR) scheme is a promising approach to encouraging pro-environmental behavior, balancing fiscal and emission performance. However, it remains theoretically underexplored. To address this, an experimental study with 270 participants was conducted. A validation experiment identifies significant theory-practice deviations, particularly in the low-credit group, which jeopardizes fiscal sustainability. Three non-financial interventions are tested, with low-credit feedback using downward social comparison proving most effective at improving fiscal outcomes. A Beijing-based case study illustrates potential savings of billions of yuan over six years. The study recommends that policymakers implement targeted interventions such as downward comparisons for penalized low-credit users, and integrate non-financial tools more widely.