Friends of the Behavioral Economics Blog, this week we present the paper “Lessons for climate policy from behavioral biases towards Covid-19 and climate change risks”, by Botzen, W.; Duijndam, S. and van Beukering, P. (2021), in which authors explain, using behavioral economics’ concepts, the cognitive biases that affect people regarding the decision-making process when it comes about covid-19 and climate change.

If Covid-19 has achieved anything, it has been to expose that our globalized society is very fragile and vulnerable to impacts. This has raised strong concerns about the sustainability of our way of life.

It has also revealed how population growth, urbanization, globalization, and mass travel result in a complex reality, with impacts that are global in scope.

On many occasions, comparative analysis are frequently drawn between Covid-19 and climate change due to the magnitude of their effects. And, in fact, they are much more similar phenomena than they may seem.

For example, both disproportionately affect disadvantaged communities, thus intensifying global inequalities.

On the other hand, both the impacts of the pandemic and many consequences of climate change can be defined as risks of low probability and severe consequences.

We could even see the Covid-19 crisis as a kind of quick learning experiment on how to deal with climate change. On the one hand, it shows that changes in the current lifestyle, even if temporary, are possible, and this is positive. On the other hand, there is a lack of preparation and the development of effective responses to combat the pandemic is slow, as well as there are many negative impacts on the global economy and health.

For all this, it seems logical and sensible to draw lessons from the experiences of the pandemic for climate policy.

Drawing on concepts from psychology and behavioral economics, authors set out to illustrate how decision-making processes against Covid-19 can be paralleled with those against climate change.

To do this, they talk about some cognitive biases and how they influence humans in these contexts.

One of them is simplification. Simplification tells us that people are likely to make decisions focusing on the low probability of a disaster occurring or its possible consequences, rather than making a rational risk assessment.

Many risks related to climate change, such as natural disasters, have a low probability, which makes people unconcerned. The same case happens with pandemics. People downplay the likelihood of their occurrence until they show up in their environment, which is when people start to think about the health consequences and decide to take action.

Then they tell us about availability. People underestimate some risks, such as those related to climate change and Covid-19, until they experience the consequences of the disaster or hear that their friends or family have been threatened. This underestimation is caused by availability bias.

Empirical studies show that individual concern about climate change and willingness to adopt mitigation measures are positively related to experiences of accompanying risks.

For Covid-19, it has also been seen that people are more concerned about the risk when it affects their country.

They also mention myopia. It is a way of calling a bias that is explained by the fact that people often evaluate decisions in shorter time horizons than those necessary for investments to mitigate climate change having positive effects.

This behavior is related to the discounting of future risk reduction benefits and the overweighting of initial costs.

This bias reduces the demand for mitigation and adaptation measures to climate change, which imply a high initial cost and benefits only in the long term.

This bias can be seen in the Covid-19 pandemic, as many people initially accepted the strong lockdown measures because the problem was immediate and urgent. However, this would not be the case for climate change, which is a long-term problem.

Authors also explain other biases, such as herding, or the “not in my mandate” bias.

To address simplification and availability biases, they advocate the development of communication strategies that emphasize the consequences of the risks associated with climate change and Covid-19, to ensure that people pay attention to these phenomena.

The myopia bias makes citizens focus on short-term risks, as we have already discussed. This lack of action can be overcome by linking the policies and measures that are currently being adopted to limit the risks of the pandemic, with actions that also reduce the risks of climate change.

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