Skip to main content
SpringerLink
Log in

What Can Be Learned from Behavioral Economics for Environmental Policy?

  • Chapter
New Perspectives for Environmental Policies Through Behavioral Economics

Abstract

Behavioral Economics has attracted the attention of environmental economists: it should help to understand why people do not respond to environmental policy measures, based on neoclassical assumptions, as predicted by theory. Moreover, understanding motives and driving forces behind pro-social, pro-environmental, and cooperative behavior should help to improve environmental policy design. The aim of this paper is to present a critical discussion of how this branch of research is interpreting the explanatory power and the normative implications of behavioral Economics.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Time-consistency is a requirement when considering perfect act-rationality with rational expectations.

  2. 2.

    The same issue is relevant for ethical consumption like e.g. “Fair Trade”.

References

  • Anthoff D, Hahn R (2010) Government failure and market failure: on the inefficiency of environmental and energy policy. Oxf Rev Econ Pol 26:197–224

    Article  Google Scholar 

  • Aumann RJ (2008) Rule-rationality versus act-rationality. Discussion Paper Series dp497, Center for Rationality and Interactive Decision Theory, Hebrew University, Jerusalem

    Google Scholar 

  • Baddeley M (2011) Energy, the environment and behaviour change: a survey of insights from behavioural economics. Working Paper CWPE 1162, October 2011

    Google Scholar 

  • Bazin D, Ballet J, Touahri D (2004) Environmental responsibility versus taxation. Ecol Econ 49:129–134

    Article  Google Scholar 

  • Berg N, Gigerenzer G (2007) Psychology implies paternalism? Bounded rationality may reduce the rationale to regulate risk-taking. Soc Choice Welf 28:337–359

    Article  Google Scholar 

  • Bochet O, Page T, Putterman L (2006) Communication and punishment in voluntary contribution experiments. J Econ Behav Organ 60:11–26

    Article  Google Scholar 

  • Bolton GE, Ockenfels A (2000) ERC: a theory of equity, reciprocity, and competition. Am Econ Rev 90(1):166–193

    Article  Google Scholar 

  • Brandt US, Svendsen GT (2004) Rent-seeking and grandfathering: the case of GHG trade in the EU. Energ Environ 15(1):69–80

    Article  Google Scholar 

  • Brekke KA, Johansson-Stenman O (2008) The behavioural economics of climate change. Oxf Rev Econ Pol 24(2):280–297

    Article  Google Scholar 

  • Brosig J, Ockenfels A, Weimann J (2003) The effect of communication media on cooperation. Ger Econ Rev 4(2):217–241

    Article  Google Scholar 

  • Carpenter JP (2007) Punishing free-riders: how group size affects mutual monitoring and the provision of public goods. Game Econ Behav 60:31–51

    Article  Google Scholar 

  • Chalmers AF (1999) What is the thing called science? 3rd edn. Open University Press, Buckingham

    Google Scholar 

  • Conlisk J (1996) Why bounded rationality? J Econ Lit 34:669–700

    Google Scholar 

  • Coricelli G, Fehr D, Fellner G (2004) Partner selection in public goods experiments. J Confl Resolut 48(3):356–378

    Article  Google Scholar 

  • Elster J (1996) Rationality and the emotions. Econ J 106:1386–1397

    Article  Google Scholar 

  • Elster J (1998) Emotions and economic theory. J Econ Lit 36(1):47–74

    Google Scholar 

  • Fehr E, Falk A (2002) Psychological foundations of incentives. Eur Econ Rev 46:687–724

    Article  Google Scholar 

  • Fehr E, Gächter S (2002) Altruistic punishment in humans. Nature 415:137–140

    Article  Google Scholar 

  • Fehr E, Schmidt M (1999) A theory of fairness, competition, and cooperation. Q J Econ 114(3):817–868

    Article  Google Scholar 

  • Fischbacher U, Gächter S, Fehr E (2001) Are people conditionally cooperative? Evidence from a public goods experiment. Econ Lett 71:397–404

    Article  Google Scholar 

  • Frank R (1988) Passions within reason. The strategic role of the emotions. W.W. Norton, New York, NY

    Google Scholar 

  • Frey BS, Stutzer A (2008) Environmental morale and motivation. In: Lewis A (ed) The Cambridge handbook of psychology and economic behaviour. Cambridge University Press, Cambridge, pp 406–428

    Chapter  Google Scholar 

  • Geanakoplos J, Pearce D, Stacchetti E (1989) Psychological games and sequential rationality. Game Econ Behav 1:60–79

    Article  Google Scholar 

  • Gigerenzer G, Todd PM, The ABC Research Group (1999) Simple heuristics that make us smart. Oxford University Press, New York, NY

    Google Scholar 

  • Gowdy JM (2008) Behavioral economics and climate change policy. J Econ Behav Organ 68:632–644

    Article  Google Scholar 

  • Gsottbauer E, van den Bergh JCJM (2011) Environmental policy theory given bounded rationality and other-regarding preferences. Environ Resour Econ 49:263–304

    Article  Google Scholar 

  • Güth W (2008) (Non-) behavioral economics: a programmatic assessment. J Psychol 216(4):244–253

    Google Scholar 

  • Güth W, Berninghaus SK, Kliemt H (2004) From teleology to evolution: bridging the gap between rationality and adaptation in social explanation. J Evol Econ 13(4):385–410

    Google Scholar 

  • Güth W, Kliemt H (2000) Evolutionarily stable co-operative commitments. Theor Decis 49:197–221

    Article  Google Scholar 

  • Heiner R (1983) The origin of predictable behavior. Am Econ Rev 73:560–595

    Google Scholar 

  • Heiner R (1988) The necessity of imperfect decisions. J Econ Behav Organ 10:29–55

    Article  Google Scholar 

  • Isaac RM, Walker JM (1988a) Communication and free-riding behavior: the voluntary contribution mechanism. Econ Inq 26(4):585–608

    Article  Google Scholar 

  • Isaac RM, Walker JM (1988b) Group size effects in public goods provision: the voluntary contributions mechanism. Q J Econ 103(1):179–199

    Article  Google Scholar 

  • Isaac RM, Walker JM, Williams AW (1994) Group size and the voluntary provision of public goods: experimental evidence utilizing large groups. J Public Econ 54:1–36

    Article  Google Scholar 

  • Kahneman D, Tversky A (1979) Prospect theory: an analysis of decision under risk. Econometrica 47:263–291

    Article  Google Scholar 

  • Kallbekken S, Sælen H (2011) Public acceptance for environmental taxes: self-interest, environmental and distributional concerns. Energ Policy 39:2966–2973

    Article  Google Scholar 

  • Keser C, van Winden F (1997) Partners contribute more to public goods than strangers: conditional cooperation. Tinbergen Institute discussion papers No 97-018/1, Tinbergen Institute

    Google Scholar 

  • Kischka P, Puppe C (1992) Decisions under risk and uncertainty: a survey of recent developments. Methods Model Oper Res 36:125–147

    Article  Google Scholar 

  • Knetsch JL (2003) Environmental, ecological, and behavioural economics. In: Dovers S, Stern DI, Young MD (eds) New dimensions in ecological economics: integrated approaches to people and nature. Edward Elgar, Cheltenham, pp 77–87

    Google Scholar 

  • Kollmann A, Schneider F (2010) Why does environmental policy in representative democracies tend to be inadequate? A preliminary public choice analysis. CESifo Working paper no. 3223, Category 2: Public Choice, October 2010

    Google Scholar 

  • Loewenstein G (2000) Emotions in economic theory and economic behavior. Am Econ Rev Pap Proc 90(2):426–432

    Article  Google Scholar 

  • Neilson W, Stowe J (2002) A further examination of cumulative prospect theory parameterizations. J Risk Uncertain 24(1):31–46

    Article  Google Scholar 

  • O’Donogue T, Rabin M (2003) Studying optimal paternalism, illustrated by a model of sin taxes. Am Econ Rev 93:186–191

    Article  Google Scholar 

  • Pasche M (2008) Zum Erklärungsgehalt der verhaltensorientierten Spieltheorie. Jena Research Papers in Business and Economics 04/2008

    Google Scholar 

  • Pfister H-R, Böhm G (2008) The multiplicity of emotions: a framework of emotional functions in decision making. Judgm Decis Mak 3(1):5–17

    Google Scholar 

  • Rabin M (1993) Incorporating fairness into game theory and economics. Am Econ Rev 86(3):1281–1302

    Google Scholar 

  • Reimer T, Hoffrage U (2006) The ecological rationality of simple group heuristics: effects of group member strategies on decision accuracy. Theor Decis 60(4):403–438

    Article  Google Scholar 

  • Reinstein D, Riener G (2012) Reputation and influence in charitable giving: an experiment. Theor Decis 72:221–243

    Article  Google Scholar 

  • Sefton M, Shupp R, Walker JM (2007) The effect of rewards and sanctions in provision of public goods. Econ Inq 45(4):671–690

    Article  Google Scholar 

  • Shogren JF, Parkhurst GM, Banerjee P (2010) Two cheers and a qualm for behavioral environmental economics. Environ Resour Econ 46:235–247

    Article  Google Scholar 

  • Shogren JF, Taylor LO (2008) On behavioral-environmental economics. Rev Environ Econ Policy 2(1):26–44

    Article  Google Scholar 

  • Smith A (2011) Group composition and conditional cooperation. J Soc Econ 40:616–622

    Article  Google Scholar 

  • Stern N (2010) Presidential address: imperfections in the economics of public policy, imperfections in markets, and climate change. J Eur Econ Assoc 8(2–3):253–288

    Article  Google Scholar 

  • Sugden R (2008) Why incoherent preferences do not justify paternalism. Constit Polit Econ 19:226–248

    Article  Google Scholar 

  • Thaler RH (2000) From homo economicus to homo sapiens. J Econ Perspect 14(1):133–141

    Article  Google Scholar 

  • Thaler R, Sunstein CR (2008) Nudge: improving decisions about health, wealth and happiness. Penguin, Harmondsworth

    Google Scholar 

  • Trout JD (2005) Paternalism and cognitive bias. Law Philos 24(4):393–434

    Article  Google Scholar 

  • Tversky A, Wakker P (1993) An axiomatization of cumulative prospect theory. J Risk Uncertain 7:147–176

    Article  Google Scholar 

  • van den Bergh JCJM, Ferrer-i-Carbonell A, Munda G (2000) Alternative models of individual behaviour and implications for environmental policy. Ecol Econ 32:43–61

    Article  Google Scholar 

  • Vanberg VJ (2004) The rationality postulate in economics: its ambiguity, its deficiency and its evolutionary alternative. J Econ Methodol 11:1–29

    Article  Google Scholar 

  • Venkatachalam L (2008) Behavioral economics for environmental policy. Ecol Econ 67:640–645

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Friedrich Schiller University Jena, Jena, Germany

    Markus Pasche

Authors
  1. Markus Pasche
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Markus Pasche .

Editor information

Editors and Affiliations

  1. FB 7, University of Kassel, Kassel, Germany

    Frank Beckenbach

  2. adelphi consult, Berlin, Germany

    Walter Kahlenborn

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer International Publishing Switzerland

About this chapter

Cite this chapter

Pasche, M. (2016). What Can Be Learned from Behavioral Economics for Environmental Policy?. In: Beckenbach, F., Kahlenborn, W. (eds) New Perspectives for Environmental Policies Through Behavioral Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-16793-0_4

Download citation

Publish with us

Policies and ethics

Search

Navigation