Behavioral Economics Policy Impact and Future Directions (2023) / Chapter Skim
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8 Climate Change
8 Climate Change
Pages 139-156
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From page 139... ...
The 2022 report of the Intergovernmental Panel on Climate Change (International Panel on Climate Change, 2022) indicates that changes in food consumption, shifts to more sustainable use of consumer goods, reduced energy consumption, and other behavioral and lifestyle changes could play an important role in reducing emissions that contribute to climate change.
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Before considering those sectors we first discuss the general issue of behavioral economic concepts in the domain of climate change. DIFFICULTIES IN APPLYING BEHAVIORAL PRINCIPLES TO CLIMATE GOALS There are numerous challenges in using behavioral economic concepts to address climate change.
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Neither people considering their own circumstances nor policy makers weighing competing political interests are likely to focus on long-term consequences. Furthermore, many of the benefits of preventing and mitigating climate change do not accrue to the people making the changes.
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that specifically target behavioral interventions can create incentives for both kinds of decisions.4 We consider several of the committee's core principles in this domain: limited attention and cognition, social preferences and norms, and present bias and reference dependence. Limited Attention and Cognition Messer, Ganguly, & Xie (2022)
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Social Preferences and Norms Moral suasion (informing people of desirable behaviors) and appealing to social norms and social comparisons are among the most used and studied behaviorally based interventions to encourage energy conservation (Carlsson et al., 2021a)
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Similarly, field experiments and quasi-experiments, as well as observational studies, have shown that peer effects and provision of information about social norms affect households' adoption of solar panels. This work suggests that the effects are strongest when neighboring solar panels are visible from the street and when they are numerous.
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Traditional economic models are based on the assumption that consumers correctly value future operating costs when assessing the tradeoffs between the cost of a vehicle and the expected costs. However, behavioral economists have shown that consumers frequently underestimate the savings they would realize with an energy-efficient vehicle when choosing between that option and a less fuel-efficient one and that car buyers typically calculate fuel savings without considering the present discounted value of future fuel costs (Gillingham & Palmer, 2014)
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Reference Dependence Consumers can directly reduce their carbon footprints by opting to use public transportation for daily commutes and other long-distance trips, carpooling, or planning trips more efficiently. Established habits are a key barrier to such decisions, and strategies for addressing this include asking people to make visible personal commitments and personalized trip plans (Chen & Chao, 2011; Verplanken & Roy, 2016)
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We discuss two of the committee's core principles for this domain: limited attention and cognition and social preferences and norms. Limited Attention and Cognition Agricultural conservation programs that encourage landowners to prevent soil erosion, protect drinking water, or preserve and restore forestland have been plagued by low adoption rates in part because of complexity associated with completing paperwork and navigating the enrollment requirements of federal programs.6 Thus, making programs salient and simple is a logical intervention target.
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From page 148... ...
Studies in all three domains have addressed limited attention and cognition and appeals to social norms; present bias and reference dependence have also been considered in the domains of 7Empathy nudges are designed to appeal to specific behavioral factors, such as one's sense of self (ego) or the potential to feel empathy.
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• Nudges related to social norms and preferences -- if carefully tar geted to specific populations -- showed modest effects for encour aging energy conservation, climate-friendly transportation choices, and land use decisions. Since these are low-cost interventions, they still often have a high return (despite modest effect sizes)
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American Economic Review, 104, 3003–3037. https://doi.org/10.1257/aer.104.10.3003 Allcott, H., & Taubinsky, D
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Using the theory of planned be havior, technology acceptance model, and habit to examine switching intentions toward public transit. Transportation Research Part F: Traffic Psychology and Behaviour, 14, 128–137.
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Understanding low take-up of a free energy efficiency program. American Economic Review, 105, 201–204.
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power: Experimental evidence from residential energy use. American Economic Review, 104, 1417–1438.
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. Farmers follow the herd: A theoretical model on social norms and payments for environmental services.
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. Limited attention and the residential energy efficiency gap.
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. An experimental test of the effect of negative social norms on energy-efficient investments.
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