Abstract

This paper develops a framework to study environmentalism as a cultural phenomenon, namely as reflecting a process of social identification with certain values. The model is used to explain how the shares of environmentalists and materialists in society can coevolve with taxes on emissions to protect society against damages caused by environmental degradation. These policies are determined by electoral competition. However, even though politicians internalize the welfare of those currently alive and pick utilitarian optimal policies, the dynamic equilibrium paths of policies and evolving values may not converge to the steady state with the highest level of long-run welfare.

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