environment - Behavioral Economics Blog

Social preferences and Environmental Behavior: does a relationship exist? Insights from Behavioral Economics. Behavioral Economics Club

February 25, 2023 By Paula Atienza 5 Mins Read

Friends of the Behavioral Economics Club, this week we present the paper “Social Preferences and Environmental Behavior: a Comparison of Self-Reported and Observed Behaviors” by Oliphant, Z.; Jaynes, C. M. and Moule, R. K. (2020), in which authors, using the behavioral economics’ perspective and games developed by it, study whether a relationship between our social preferences and our tendency to recycle exists.

That the Earth has limited resources is not new information for us. Neither is the fact that pursuing sustainability is a necessity in the modern society we live in.

But what is sustainability? The UN defines it as development that meets the needs of the present without compromising the ability of future generations to meet theirs.

Since the importance of this term has been recognized, many organizations have advocated implementing sustainable practices in an interdisciplinary economic, social and environmental setting. That is, there is a desire to “become green.”

Similarly, there has been a growing push for people, individually, to play a role in contributing to live in a more sustainable world.

Authors wonder if there is a way to study behaviors related to the environment, especially recycling, from the point of view of behavioral economics.

As it is a field with very little literature on the matter, they explored the possibility of establishing a relationship between social preferences, which are already being widely studied from behavioral economics, and the tendency of people to recycle or not.

They understand that both concepts can be related by the following idea. Classical economic theories of choice assume that individuals are interested in maximizing their benefits and minimizing expected costs, and act accordingly.

However, there are cases in which people deviate from the protection of their self-interest in ways that appear to demonstrate sincere concern for the well-being of others, or in other words, they have prosocial behaviors. For example, volunteering or donations.

These are altruistic behaviors that move away from the idea that the human being is selfish by nature, since they involve costs for the individual that are not necessary.

Taking these ideas into account, they wonder if it would also affect recycling, considering it is altruistic behavior.

On the other hand, authors investigate whether increasing the proximity and ease with which people can participate in pro-environmental behaviors, would influence and positively affect these behaviors.

For this objective, they organized an experiment in which 282 young university students participated.

At the beginning of this experiment, they were given questionnaires so that they made a self-report on their pro-environmental behaviors.

The experiment was based on playing two games commonly used in behavioral economics studies, called “ultimatum” and “dictator”. Two individuals are involved in both.

In the ultimatum game, one player has a certain amount of money and offers the other player part of it. If Player 2 rejects Player 1’s offer, they will both walk away with nothing.

In the dictator game, player 1 also offers a quantity of money to player 2, which must be accepted by the latter.

The results were interesting and surprised authors.

In the game of the ultimatum and the dictator, the majority of participants (59%) offered half of the total money that they imagined possessed. Only 3% of the sample did not offer any of their money to the second player.

An explanation for this can be altruism, but also, in the case of the ultimatum game, exists the idea that offering too little money could cause Player 2 to reject the offer and therefore both people would walk away with a total of 0.

On the other hand, the sample reported a high pro-environmental behavior in the self-reports, which suggested to the authors that they would recycle if they were given the opportunity to do so. When this opportunity was given, it was observed that 85% of the respondents did indeed recycle.

Regarding demographic factors and self-reports, it appears that men were significantly less likely to state that they act in an environmentally friendly way.

On the other hand, it was seen that, when participants had a container nearby where they could recycle, they did so without problems, so facilitating recycling would initially increase its practice.

The most important finding is that it seems that social preferences are not significantly linked to pro-environmental behaviors. That is, there is a lack of support that can be attributed to perceptions that the effectiveness of pro-environmental behaviors is weak and that respondents were skeptical about the willingness of others, or the community, to recycle.

One limitation would be that the experiment was carried out thanks to the participation of young university students and, therefore, they are not a reflection of the whole society.

Authors encourage those who create environmental policies to improve accessibility to recycling and coordinate their environmental sustainability efforts with the research conducted.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

In Scientific articles

What behavioral changes should be promoted to increase people’s ecological awareness? Behavioral Economics Blog

January 28, 2023 By Paula Atienza 4 Mins Read

Friends of the Behavioral Economics Blog, this week we present the paper “How to Effectively Promote Eco-Friendly Behaviors: Insights from Contextual Behavioral Science”, by Stapleton, A.; McHugh, L. and Karekla, M. (2022), in which authors think about how to promote behaviors that favor the ecological awareness of people and organizations.

Climate change is one of the major concerns of the 21st century for several reasons: it is occurring in the present, its severity is increasing rapidly, and human activity is contributing to this increase.

Experts comment that, despite scientific consensus on the imminent and permanent effects of climate change, organized action to prevent further damage is, actually, minimal.

This is very interesting, as they suggest that climate change can be effectively reduced and managed through adaptation and mitigation. For humanity to survive and thrive, responses that involve both are necessary: mitigation, to reduce the behaviors that cause climate change; and adaptation, to adjust to the expected irreversible changes.

In short, climate change is a problem caused by human behavior that can also be solved by human behavior. But to change human behavior in a meaningful and lasting way over time, a scientific understanding of it is needed.

Contextual Behavioral Science (CBS) is an area of psychology that can help us in this mission.

CBS draws on evidence to understand human behavior, especially language and cognition, as humans understand the world through their thoughts, experiences and senses.

According to CBS, to promote practices that help reduce climate change, it is necessary for organizations and companies to examine their practices and improve them. In other words, consumer behavior does not just happen, but occurs in a particular context and is often guided by social reinforcement.

The CBS proposes some strategies or starting points to improve ecological behaviors. For example, they point out how important it is to establish credibility.

Messages that promote environmentally friendly behaviors are more likely to be effective when presented by a credible speaker. Credible speakers are those who are perceived by consumers as logical, sincere and knowledgeable.

Organizations and companies can establish this credibility in a number of ways: either directly (by behaving in a way that people perceive them to be wise and honest) or verbally (by engaging with other organizations that consumers perceive to be credible).

In addition, good leadership and an ability to manage high quality knowledge are also important to be more likely to support sustainable development corporate practices.

The importance of the message making sense and increasing consumers’ perceived self-efficacy is also noted. That is, a message is more likely to promote a behavioral change if it appears plausible to the consumer. This means ensuring that the elements of the message are not contradictory to the consumer’s understanding of the world.

The importance of message plausibility has been addressed in the behavioral literature, especially regarding clinical patients’ adherence to their treatments. For example, if the disease and treatment are presented in a clear way and the doctor ensures that the patient fully understands them, there is a greater chance that the treatment will be successfully completed.

On the other hand, the idea of facilitating the transition of ecological behaviors into habitual and routine behaviors is interesting.

Establishing pro-environmental habits is the ultimate goal and it should be kept in mind that habits arise from continuous reinforcement until the behavior becomes automatic and cognitively efficient.

Therefore, organizations seeking to promote pro-environmental behaviors must also strive to turn them into habits and thus sustain the changes over the long term.

In a nutshell, it is vital to combat climate change to establish credibility, incentivize effectively, be consistent, help people realize that they can achieve these changes and also align their motivations with their behavior.

Some of the most significant gestures to stop climate change are quite simple and others, on the contrary, would involve sacrificing a number of comforts to which we have become accustomed in recent years.

However, authors believe that, given the severity of the environmental crisis we are experiencing, behavioral change is more than justified if we want to save our planet.

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In Scientific articles

How does the perceived environmental impact influence appliance choice? Behavioral Economics Blog

August 13, 2022 By Paula Atienza 4 Mins Read

Friends of the Behavioral Economics Blog, this week we present the paper “How does information on environmental emissions influence appliance choice? The role of values and perceived environmental impacts”, by He, S.; Blasch, J. and van Beukering, P. (2022), in which authors carry out a study to know how the fact of having information about the environmental impact generated by our actions affects our appliance choice.

Private residences account for 27% of total electricity consumption worldwide. The main uses of this percentage of electricity are heating, household appliances, water heating, space cooling, cooking and lighting.

In the context of the European Union, household appliances and electrical appliances that are responsible for performing these functions, mostly have an energy label that follows a specific framework created by the EU.

With this labeling, the EU aims to provide clear and simple information on energy-related products, so that consumers can make informed choices and, consequently, reduce their energy bills while contributing to mitigating climate change.

To this end, public authorities and academics have made efforts to provide real and constantly improving information on energy labels.

One of the many ideas behind this labeling is that one of the best ways to encourage investment in energy efficiency is to directly communicate the link between energy efficiency and carbon emissions. According to the knowledge deficit model, individuals may have a reluctance to engage in pro-environmental behavior due to a lack of knowledge about a specific environmental problem, or about ways to address it.

Providing information on environmental emissions is one way to fight the knowledge deficit, as it establishes a direct link between energy efficiency and environmental impact and may facilitate individual efficiency investment decisions.

Most existing studies demonstrate a positive impact of environmental signals (such as labels) on the adoption of energy efficient devices, although the effectiveness varies between individuals.

However, previous studies on energy labeling have rarely investigated the psychological factors of individuals that produce this variability in label effectiveness. As research in environmental psychology suggests, the way individuals process environmental information may also be affected by the individual’s values. These values reflect the individual’s overall goal in life and may affect information processing, as well as influence whether individuals pay more or less attention to environmental information, and how they interpret it.

Personal experiences, such as experiences in extreme weather conditions, can lead to a high level of risk perception and concern, ultimately resulting in pro-environmental behaviors. Theoretically, having experienced adverse environmental events suggests psychological proximity between the problem and the individual, which may increase the likelihood of supporting climate change mitigation and taking action. However, the empirical evidence is inconclusive.

To investigate the effectiveness of energy labels, authors conducted an online questionnaire to nearly 1,000 subjects.

Overall, the results reported no significant effects on environmental emissions from the labels. However, providing information on carbon emissions may potentially encourage investment in energy efficiency among individuals with relatively high environmental values who are concerned about climate change.

Additionally, authors found that providing information on carbon emissions along with other pollutant emissions may increase the likelihood of choosing more efficient appliances among individuals with high environmental awareness.

However, information on carbon emissions alone does not show significant effects. It would seem that it would be the attitudes and energy saving habits of individuals that would contribute most to energy efficiency decisions.

Encouraging investment in energy efficient appliances and providing information on air pollutants may be useful strategies when individuals intentionally seek detailed information on which appliances to purchase.

It is worth noting that authors conducted their study in the context of the Netherlands, where residents are relatively aware of the problems associated with climate change, but are not highly concerned about air pollution, so they encourage other experts to conduct studies in different contexts where the findings may differ.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Master of Science in Behavioral Economics, a 100% online program that you can take in Spanish or English, with special grants for readers of the Behavioral Economics Blog.

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Is stopping mass consumption the key to improving environmental health? Behavioral Economics Blog

June 18, 2022 By Paula Atienza 4 Mins Read

Friends of the Behavioral Economics Blog, this week we present the paper “Addressing Consumerism and the Planetary Health Crisis: Behavioral Economics Approach in Public Policy” by Sarkar, A. (2022), in which the author speaks about the different environmental problems that have been emerging in the last few years and are related to consumption, plus, he points out the utility of behavioral economics to improve the reduction of the negative impacts they have.

Climate change, environmental pollution and the loss of biodiversity are the great enemies of humanity and, currently, its greatest threat.

They are called “The Planetary Crisis Triad”, and they cause serious problems in numerous areas of life. For example: the increase in extreme weather events, the spread of vector-borne infectious diseases due to the expansion of invasive arthropods into regions that were previously cold climates, hormonal diseases due to exposure to pollutants, even mental illnesses, among others many consequences.

That is why, for some years, the guidelines dictated by a series of international protocols and agreements have been followed, which have achieved some progress. For example, a decline in the production of hazardous chemical materials such as persistent organic pollutants, the rapid growth of renewable energy, and a commitment to stop promoting coal-fired power plants.

Even so, no international treaty has focused on stopping the unnecessary mass consumption at the individual level. Consumption is the main pull factor for high energy demands and depletion of the Earth’s finite resources, and industries are constantly increasing their output to meet customer demand.

In this sense, the rich countries and emerging economies cannot deny their part of responsibility in controlling current levels of consumption.

In recent years, the promotion of electric vehicles has been very important in stopping greenhouse gases, and its effects are expected to be even greater in the coming years.

However, it is worth noting that growing energy demands cannot be met by renewables alone. Renewable energy sources provide clean energy, but they also produce toxic waste. The evidence therefore makes it clear that success in tackling the planetary health crisis depends on tackling our consumption.

This is where the concept of circular economy appears. It is a novel discipline that aims to operate in the use of resources within closed-loop systems, reduce pollution and prevent resource leakage while maintaining economic growth. The system is called “circular” because it aims to reduce, reuse, recycle and recover.

However, circular economy has been criticized for having a limited conceptual basis and lack of consistency in terms of how it can contribute to sustainable development, for example if recycling itself is energy intensive.

In today’s society, a pervasive sense of dissatisfaction drives humans to desire material things and their subsequent rapid disposal, resulting in the purchase of newer products (here terms such as “planned obsolescence” become relevant). For example, we now buy 4-5 times more clothes than we did 30 years ago, leaving a staggering environmental impact. Globally, the fashion industry produces almost 90 million tons of waste per year, and consumes at least 80 billion liters of water.

Drawing on psychology and economics, behavioral economics has repeatedly proven its usefulness for many purposes, and the author believes that it could provide effective answers to the problem of the environment.

For example, humans are known to move in a fast, immediate world, so simple messages about stopping buying so much and using biodegradable products, switching to “eco-friendly” alternatives, might be more helpful.

Taxes and allowances can work well at times; however, simple economic incentives are not useful for everything; for example, charging for plastic bags in stores does not prevent customers from taking them away.

The author also mentions nudges, which are based on the fact that humans sometimes need nudges to act rationally. Well thought out, they can be effective. For example, placing information on restaurant menus about plates made with local or vegetarian products, to encourage their consumption.

The conclusion is that a paradigm shift is necessary to motivate and lead people towards a pro-environmental path, through effective social learning, advertising and communication campaigns, etc. For this, it seems that behavioral economics and the architecture of choice are very useful tools whose application should be explored.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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What do people think about the utilization of nudges to improve their behavior to protect the environment? Behavioral Economics Club

May 7, 2022 By Paula Atienza 4 Mins Read

Friends of the Behavioral Economics Club, this week we present the paper “Survey results on using nudges for choice of green-energy supplier” by Milaszewicz, D. (2022), in which the author analyzes the results of a big survey made to Polish population about the people’s opinion on the utilization of nudges to improve their environmental behavior.

On more than one occasion we have selected several articles on this blog dedicated to caring for the environment, due to its importance.

Global warming, for example, is a matter of concern for the entire world. It is also true for electricity consumers in general, as reflected in the existing consensus on the urgent need for radical changes in energy consumption patterns, and the polluting emissions that arise, mainly, from excessive dependence on renewable energy sources. fossil energies.

One of these agreements is the Paris Agreement, which reaches collective action to reduce the risks and impacts of climate change, and each participating country has committed to submit additional plans internally to reduce greenhouse gas emissions (from hereafter GGE).

In Poland, the context of this article, a low-carbon energy transformation will be required, with the end user playing an active role, thus marking the importance of households in this process.

According to some experts, a key strategy for reducing GG emissions is a massive shift in energy demand from carbon to green, renewable, and carbon-free energy sources, such as wind, solar, or thermal power.

Political interventions to promote these changes in the domestic context are mainly based on providing information, financial incentives, legal orders and prohibitions. However, they are often ineffective in motivating people to adopt sustainable behavior on a voluntary basis.

On the contrary, many empirical studies show that using behavioral economics on human judgment and decision making contributes to improving information, financial and legal instruments, and allows the development of new behavioral intervention tools and strategies, which that leads to the desired sustainable and lasting changes.

One of the behavioral approaches to increasing the frequency of sustainable behavior is based on the concept of “nudges”. It starts from the idea that humans have a limited rationality and we need certain impulses to change our behavior and thus achieve the common good.

The object of study of this article is the degree of acceptance of these measures, of these “nudges”, by the Polish population. In other words, the author intends to present the “nudges” as one of the change strategies to achieve pro-environmental behavior, and to analyze the factors selected to determine the acceptance of these practices by society.

To do this, she conducted a series of interviews in October 2020, a critical moment when practically the entire world was affected by the Covid pandemic. Approximately 100,000 consumers participated, ranging in age from 15 to 65.

Most of the people who participated in the study were female (52.4%), older than 55 years (32%), with a medium educational level (41%), residents of large cities (42.4%) and mostly employed workers (47.3%).

Most of Polish (81%) see the problem of climate change and its consequences as the biggest challenge facing humanity in the 21st century, and express growing support for green energy.

More than half of Polish people (58%) believe that their country should rely more on renewable energy sources to tackle the climate crisis, and 64% are in favor of the government introducing tougher measures to force the change in citizen’s behavior; within these changes, “nudges” are included.

However, there is a lack of trust in the government shown by almost half of the citizens in the study and this may be a factor that prevents the full acceptance of the tools carried by the authorities, in such a way that the desired changes were delayed. .

The author decides to highlight the idea that the Polish population is open and motivated to change their behavior in order to overcome the environmental crisis we are suffering. She also mentions that it would be very useful for those responsible for formulating energy policies to take into account each of the results of this macro-survey (more detailed in the original article), to be used in the generation of energy strategies.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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How do important events affect a couple’s life and their compromise with the environment? Behavioral Economics Blog

February 26, 2022 By Paula Atienza 4 Mins Read

Friends of the Behavioral Economics Blog, this week we present the paper “Romance and the ozone layer: panel evidence on green behavior in couples”, by Köbrich León, A. and Schobin, J. (2022), in which authors make an analysis with couples to know how the important events in their lives have affected their compromise with the environment as a couple.

It is a reality that romantic relationships are usually the center of people’s social life and, therefore, influence many aspects of our personality.

For example, previous studies on conjugal relationships identify similarities in aspects as disparate as the perception of risks, participation in the stock market or tobacco consumption. Some, even, have studied pro-environmental behavior.

However, few talk about the synchronization that happens between the members of the couple and if it is marked by important life events.

As interested in behavioral economics, we are also interested in anything that influences people’s decision-making and behavior shaping, so we are going to delve into this topic and see what authors have to tell us about it.

They mention the investment model of attachment to society. This suggests that the quality of relationships is an economic good that the couple co-produces, by aligning their behaviors in the life cycle, by socializing their preferences through daily interaction.

In addition, it predicts that the commitment that the couple has with society is the product of a reduction in the heterogeneity of preferences, because people who are highly committed to each other give up personal preferences to adapt to the interests of others.

The literature on this model shows that the strength of the commitment depends on the stage of the couple’s relationship. That is, pro-environmental behaviors will change over the course of life. Therefore, authors are on the right track when they decide to study how important events in couples’ lives affect their behavior, such as marriage or the birth of children.

Many of the pro-environmental behaviors end up becoming habits, and this is an important fact to keep in mind because important life events review habits and can establish new practices that replace them.

To explore all this, authors conducted surveys in two waves of a total of 6,349 couples, that is, 12,698 individuals.

They considered major life events (changes in marital status, pregnancy and childbirth, acquisition of real estate…) as the main variables. Beliefs about the need for action against climate change were also taken into account, in addition to socioeconomic factors, such as age, education and income.

Obtained results provide important information. For example, getting married was not found to exert a statistically significant influence on the couple’s alignment process, but the pro-environmental behavior scale scores of couples who had divorced became more similar than the ones of those who remained together.

An interesting fact is that couples who divorced but did not change their address and continued sharing their home, became more similar than couples who remained together, even if they were not married.

Regarding pregnancies and births, it shows that differences in pro-environmental behavior significantly decreased over time in couples who did not have children. For couples who did have, the opposite occurred after the baby was born.

These findings largely mirror the results of family psychology studies of changes in relationship quality and attachment during the transition to parenthood. Current literature identifies the birth of the first child as a particularly dynamic phase in the development of the couple’s division of labor and in the allocation of economic resources.

This literature suggests that most couples invest in relationship quality and attachment before delivery to buffer the decline in quality that will follow. In other words, the period of preparation for the first child is characterized by a very strong commitment to the couple. This may explain the high concordance between the pro-environmental behaviors of prenatal couples. After childbirth, divergences appear to adapt to the demands of rearing.

In short, major life events drive alignment in couples’ pro-environmental behavior, at least to some extent. The finding is consistent with previous literature, however, authors point out the need to continue investigating the subject.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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How has the plastics sector changed with the pandemic and what can we do to reduce its impact? Behavioral Economics Club

February 12, 2022 By Paula Atienza 4 Mins Read

Friends of the Behavioral Economics Club, this week we present the paper “How Covid-19 could change the economics of the plastic recycling sector”, by Issifu, I.; Worlanyo Deffor, E. And Sumaila, U. S. (2021), in which authors analyze how the pandemic has affected the consumption and recycling processes of plastics and how can we stop the negative resultant impact.

When the first cases of Covid-19 were identified, few anticipated the speed and magnitude of the impact it will have on the global economy. In fact, no one could have imagined the extent to which this new virus would close our schools, stores, airports…, or even how it would affect the price of oil.

Like most sectors, plastic recycling was affected by the pandemic, but the extent of the impact is still unknown.

Plastics are the soul of modern life, of the life we know today. The bags in which we carry food from the supermarket to home, the bottles of water, the containers… plastics have penetrated many aspects of our society.

They are designed to be durable and, due to their low cost and versatile properties, in 2015 their production reached around 8.5 billion tons.

With the pandemic, a new concern has arisen: the increase in the production and consumption of plastics. For example, we all need some kind of protection against the virus and most of the population has obtained it in the form of masks, gloves or screens, all of which are made of plastic. In February 2021, China increased its production of single-use face masks 12 times a day to meet the high demand.

That is, the need for plastic seems to be stronger now due to the pandemic, which represents a growing environmental threat. In landfills alone, 40% of the content is plastic.

With the increase in the production and use of plastic, estimations indicate that the amount that reaches the environment each year will double by 2050.

In addition, the increase in the production of personal protective equipment is unprecedented. But we must add the fact that for a time the collection and classification of plastic waste was paralyzed in many countries due to strict confinement and social distancing measures.

At the time the article was published (late 2021), the demand for personal protective equipment exceeded the global supply. Masks have become the most sought-after utensil in almost the entire world, along with respirators with high filtration power, gowns, half-face respirators…

Another way the pandemic affected global plastic recycling is through falling oil prices. As we know, oil is the most important raw material in the production of plastic and therefore its price has a great influence on the price of plastic and the profitability of the entire recycling process. That is, the lower the price of oil, the lower the price of plastic and, therefore, the less profitable the recycling process becomes.

Considering all the information above, it is not surprising that the idea that turns out in our heads is that we must apply public policies and programs aimed at the urgent recycling of waste, especially plastics.

What are the strategies proposed by authors? In the first place, the deposit-reimbursement system, which implies the payment of a deposit for the purchase of a polluting product. This deposit can be refunded once the product or its waste is returned to the seller, or deposited at an established collection point. This system could encourage proper waste management and, therefore, recycling.

Another idea is subsidies and tax incentives. The tax system can be used to subsidize the use of recyclable products, while loans and subsidies can be used more broadly for the adoption of innovative waste management technologies. In addition, financial and technical support could be provided to recycling companies to facilitate the collection and processing of personal protective equipment.

There is also price differentiation. The possibility of using it as a tool to promote plastic recycling revealed the willingness of consumers to pay a higher price for products made from recycled plastics, which could then be used to finance the collection and transport of plastic waste, and reuse in recycling.

Until it is decided how and when some measure will be implemented, we must encourage, for now, people and companies, not to throw away, but to recycle, in order to try to reduce plastic waste as much as possible.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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How are Covid-19 and climate change similar and what can we do from behavioral economics to fight against them? Behavioral Economics Blog

January 29, 2022 By Paula Atienza 4 Mins Read

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.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.