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“Great Transformation” Towards Sustainability and Behavioral Economics

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New Perspectives for Environmental Policies Through Behavioral Economics

Abstract

Human economic activity and its effects on the environment are ever more clearly approaching critical ecological limits. At the same time, the ecological crisis is accompanied by multiple socio-economic crises in the economy, society, state governance capacity, and in the development of scientific theory. Under such crisis conditions, how should successful ecological sustainability institutions be designed and how can social change be initiated? Far-reaching visions of a “great transformation” stand alongside rather sobering findings from institutional and behavioral economics research on the institutional framework for change and collective mitigation through cooperation.

The biggest problem is not to let people accept new ideas, but to let them forget the old ones.

(Keynes 2009[1936], Preface).

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Notes

  1. 1.

    Here, the term “common goods” is used to summarize those (partially) public goods that dominate in the environment, which are characterized by rivalrous consumption but which face problems of excludability of access. Such goods are also referred to as common-pool resources and describe natural (fishing grounds, pastures) or man-made resource systems (irrigation) exploited by a majority of users; at the same time, excluding or restricting use by parties potentially interested in using the resource is either technically impossible, too costly to organize, or has been deliberately suspended by collective use regulations (non-excludability). Pure public goods, on the other hand, lack the “consumption rivalry” characteristic that is so typical to environmental resources: Use of a fishing ground or an area of rain forest typically depletes the supply for other parties interested in using the resource.

  2. 2.

    The term is used here in the wider sense of allocation theory, according to which common goods, in general, pose economic problems of efficient management due to lacking, too costly, or non-implementable exclusion technologies.

  3. 3.

    The concept of “spontaneous order” (also known as self-organization) regards social structures as the unplanned result of interaction between decentralized decisions—for an overview see, for example, Barry (1982). Prominent examples from the field of economics are the “invisible hand” developed by Adam Smith and the Hayek’s idea of markets as a “discovery procedure”.

  4. 4.

    That a privatization of property rights—insofar as this is possible or economically viable—does not necessarily lead to efficient results is also illustrated by the “tragedy of the anticommons”: here the over-optimal distribution of rights leads to market paralysis (co-ordination problem as a result of “too many” rather than “too few private” rights-holders), as for example in the case of patent protection or bureaucracy in licensing law—see Heller (1998).

  5. 5.

    Stollorz (2011, p. 5), for instance, talks of an “economic theory that is cast in stone,” in which “for too long […] people’s ability to engage in cooperative behaviour in complex situations has been underestimated.” Of course, this view is at best outdated: decades earlier, Musgrave (1959) and Olson (1965) already expressed differentiated views on the success of cooperation in relation to public goods, and the research carried out over the years since then is simply ignored.

  6. 6.

    Cf. Güth and Kliemt (2011, p. 69). The experimentally well established set of bounded rational behaviour types includes partial orientation to the past (not relevant for future findings), revenge-motivated rather than exclusively self-interest-motivated strategic action, and initial willingness to cooperate under supposed freedom from exploitation in the group (Kreps et al. 1982; Milgrom 1982).

  7. 7.

    See Güth and Kliemt (2011, p. 78) for deviating findings based on laboratory results.

  8. 8.

    This so-called “altruistic punishing” behavior is boundedly rational because after-the-fact punishment of free riders for refusal to cooperate merely eats into one’s own resources (revenge costs), but there are no immediate gains for the punisher. The collective stabilization effect, however, is all the more effective.

  9. 9.

    In particular, the obtruding comparison to the Great Transformation of nineteenth century English society described by Polyani (1971[1944]) is up for debate: According to Polyani, the two most important moments of secular change were the emergence of market economies and nation-states.

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Authors and Affiliations

  1. Department of Economics, Helmholtz Centre for Environmental Research—UFZ, Permoser Str. 15, 04318, Leipzig, Germany

    Erik Gawel

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

    Frank Beckenbach

  2. adelphi consult, Berlin, Germany

    Walter Kahlenborn

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Gawel, E. (2016). “Great Transformation” Towards Sustainability and Behavioral Economics. 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_5

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