"Our goal was to design a program to help those employees who would like to save more, but lack the willpower to act on this desire," write Thaler and Benartzi.
Using principles drawn from psychology and behavioral economics, the plan gives workers the option of committing themselves now to increase their savings rate later. Once employees join, they stay in the plan until they opt out.
The SMarT plan has four basic components: First, employees are approached about increasing their contribution rates approximately three months before their scheduled pay increase. Second, once they join, their contribution to the plan is increased beginning with the first paycheck after a raise. Third, their contribution rate continues to increase on each scheduled raise until the contribution rate reaches a preset maximum. Fourth, the employee can opt out of the plan at any time."
Could this same idea be applied to the gas tax? Such a policy change would raise revenue and reduce greenhouse gas emissions. When the price of gasoline was $4 a gallon, could the U.S Congress have passed an act that said, for every 50 cents future decline in gasoline we will raise the gas tax by 25 cents?
Would Republicans vote for this? Yes, the price of gasoline would rise for consumers relative to the no tax scenario but the price of gasoline over time would still fall for consumers. Such legislation would collect more gas revenue when prices fall and would send a clear signal to Hummer lovers that they should continue to seek out fuel efficient vehicles.
Would Republicans vote for this? Yes, the price of gasoline would rise for consumers relative to the no tax scenario but the price of gasoline over time would still fall for consumers. Such legislation would collect more gas revenue when prices fall and would send a clear signal to Hummer lovers that they should continue to seek out fuel efficient vehicles.
I realize that if the price of gasoline becomes more volatile around the same mean then this proposal would keep raising the tax each time the gas price falls.
My point here is that that the Benartzi and Thaler logic implies that even Republicans might be willing to share a fraction of "future price declines" with the government if they trust government to use the collected funds wisely.
The interesting point here is whether Congress could pass "contingent policies". Such a policy would state: if the price of coal or gasoline declines, then we will raise this tax by x%.
UPDATE, my co-author David Levinson recently posted this on this broad issue.