Embedded Liberalism from the Ground Up: Credibility and Climate Transitions

• In Event: Political Economy of Climate Change

Abstract

Prominent theories in political economy claim that governments can secure support for policies with distributional consequences by offering side-payments to the losers. A central puzzle is whether this bargain works in practice. While the literature answers this question from the top down, focusing on the supply and target of assistance, we argue that a commitment problem structures individual preferences over transfers. This “from the ground up” perspective highlights several dimensions of commitment problems. One dimension of the commitment problem is the object of investment, with uncertainty about the durability and distribution of new jobs engendering resistance to side-payments. The second dimension is the structure of commitment itself, with institutional constraints, second-order beliefs, investment design, and costly signals influencing credibility. Using survey experiments of the general population and fossil fuel communities, we test these mechanisms. We find that transition assistance can be structured to overcome commitment problems, and that substantial heterogeneity exists in beliefs about the viability of green jobs thought to be crucial in facilitating climate transitions.

Authors

• Alexander Foster Gazmararian, Princeton

• Dustin Halliday Tingley, Harvard University