Decisions Matter: Understanding How and Why We Make Decisions About the Environment

Transcription

1 Decisions Matter: Understanding How and Why We Make Decisions About the Environment Elke U. Weber Center for Research on Environmental Decisions (CRED) Columbia University 2009 BECC Conference

2 If human behavior is causing many environmental problems (species loss, global warming, soil depletion, etc.), then behavior changes are required to address them environmental decisions are crucial

3 Environmentally-relevant decisions made every day Energy consumption heating and cooling, transportation choices Water use Gardening, swimming pools, rice farming Land use Deforestation, city planning Voting and lobbying

4 Lowering Energy Consumption Energy Efficiency Accomplish same task with less energy Driving Prius vs. Hummer Use of different lighting technologies Energy Conservation Modify task so that it can be accomplished with less energy Walk or bicycle to a destination vs. drive there Live in a smaller residence

5 Acceptance of Existing Technology for Energy Efficiency Seemingly win win win Financial gains for consumers Societal gains for environment Reduced need for new energy production facilities for utility providers McKinsey 2007 study and other groups document their negative abatement costs

6 Sources of Potential Abatement and Cost 2030, Worldwide (McKinsey, 2007, p. 27)

7 Obstacles to Harvesting the Low-Hanging Fruits of Energy Efficiency Obvious market failure Both $s and GHG reductions are left on the table Attentional limitations 1973 OPEC oil embargo helped technological innovations and adoption 2008 oil price hikes helped gasoline prices at $4.50/gallon But attention is flagging again

8 Barriers to Adoption of EE Technology Economic diagnoses People don t know about them Principal agent problems Landlord pays electricity bill, tenant not incentivized to reduce bill Energy efficiency currently not reflected in prices of used homes or cars Psychological diagnoses Current choices are habitual Inertia Fear of problems with new technology Uncertainty avoidance Upfront higher costs loom large Consumer does not want to finance purchase discounting of future savings Savings too small to be worth attention

9 Political and economic solutions Regulate behavior Building codes, efficiency standards (CAFÉ) Raise price of energy Carbon tax

10 Behavioral research provides Both good news and bad news on prospects for better environmental decisions

11 Bad News Evolution has not (yet) provided us with appropriate visceral reactions to many environmental risks Analytic evaluations are also biased towards inaction

12 No visceral reaction to environmental risks No worry, no action (Peters & Slovic 2000) Risk is a feeling (Loewenstein, Weber, Hsee & Welch 2001) Analytic concern neither necessary nor sufficient Environmental risks not the type for which we are hard-wired to worry Dan Ariely s point about reverse engineering Psychological risk dimensions not invoked (Slovic, 1987) Most people do not wake up worrying about climate change

13 Analytic evaluations biased towards inaction Life style changes require immediate sacrifices for delayed and uncertain benefits People do not discount future outcomes the way economic theory assumes they do (or should) Steep discounting of future benefits when immediate consumption is an option ( impatience, hyperbolic discounting) People are risk seeking in domain of losses Prospect theory (Kahneman & Tversky, 1979) i.e., politicians and people are willing to take their chances with climate change rather than locking in sure-loss scenarios

14 Good News Tragedy of the commons (Hardin 1968) may safely be downgraded to a drama (Ostrom et al. 2002) People blessed with cognitive abundance of three types Multiple goals Multiple ways to represent information (framing) Multiple ways of making decisions

15 Multiplicity and Mutability of Goals Human needs and goals Material, psychological (feeling in control), social (feeling connected, concern for future generations) Goals influence decisions only when activated Goal activation Cultures affect chronic activation of different goals Choice context affect temporary activation ( priming )

16 Multiple Representations Labels trigger different reactions and choices Carbon offsets more palatable than carbon taxes Group context ( we vs. I ) primes collective interests and longer time horizons (Milch et al., 2009) New mental accounts provide new goals Personal carbon footprint accounts Online fuel-efficiency displays in Toyota Prius Turn behavior change into a video game

17 Dirty Word or Dirty World study (Hardisty, Johnson, Weber, Psychological Science, 2010) Proportion Choosing the Costlier Ticket Offset Tax 0 Democrats Independents Republicans

18 Dirty Word or Dirty World study (Hardisty, Johnson, Weber, Psychological Science, 2010) Proportion Choosing the Costlier Ticket Offset Tax 0 Democrats Independents Republicans

19 Query Theory (Johnson et al., 2007; Weber et al., 2007) Theory of how preferences are constructed Process of arguing with yourself queries Action alternatives evaluated sequentially Order of evaluation affects balance of evidence Because first query generates more arguments Order is a function of What the choice default is How alternatives are framed Does one option appeal? Does one option put you off?

20 Results: Thought Listings Participants listed 2.7 thoughts (SD = 1.4) No differences between parties or frames in the number of thoughts

21 Thought List (Subject 53) good for the environment carbon offset is not that much more than regular ticket what does the extra money do to offset the carbon

22 Thought List (Subject 286) Why would I ever pay extra for this? I really don't care about a 'carbon tax' if it's the same thing, get rid of the tax. the government needs to stop taxing us randomly I will be old or dead by the time this world has an energy crisis and by that i mean a huge one where we are all fucked this is a ridiculous thought to have

23 Choices explained by order and frequency of arguments Recipe for Interventions? 1 Proportion Choosing the Costlier Ticket Offset Tax 0 Democrat Independent Republican

24 Multiple Representations Labels trigger different reactions and choices Carbon offsets more palatable than carbon taxes Group context ( we vs. I ) primes collective interests and longer time horizons (Milch et al., 2009) New mental accounts provide new goals and capture and maintain attention Online fuel-efficiency displays (Toyota Prius) Turn behavior change into a video game Personal carbon footprint accounts

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26 Multiple Ways of Making Decisions Decisions get made in qualitatively different ways (Weber & Lindemann, 2007) by the head calculation-based decisions by the heart emotion-based decisions by the book rule-based decisions

27 Environmentally responsible choices in calculation-based decisions Make environmentally-responsible options the default (Johnson & Goldstein, 2003; Thaler & Sunstein, 2008) Prime social goals (Apollo-8 image of planet earth) But, many decision biases will work against you!

28 Environmentally responsible choices in emotion-based decisions Tempting to scare people into right behavior Problematic for at least two reasons Finite pool of worry Increase in worry about one hazard decreases worry about other hazards (Weber, 1997) Single action bias Tendency to engage in single corrective action (Weber, 2006) Yet, most environmental problems require multiple responses

29 Environmentally responsible choices in rule-based decisions Much behavior driven by habits based on past calculations or internalized rules Create new habits, by following new rules Respected authority to issue new rule What would Jesus do? Behavior prescriptions need to be concrete What would Jesus drive? Capitalize on social observation and imitation by having celebrities model desired behaviors What does Angelina drive?

30 Conclusions Solutions to environmental problems require broad-based behavior changes Such changes discouraged for multiple reasons Egocentric biases and shortsighted time horizons Rational incentives to defect in commons dilemmas Existing behaviors largely automatic Hard to change with economic incentives Fear appeals problematic

31 Recommendations ( Nudges ) Introduce new mental accounts and metrics to focus attention on environmental goals and to measure progress Shift from calculation- or emotion-based to rule-based decision processes to overcome myopic self-interest Use automatic processes (social learning and imitation) to modify undesired automatic behavior Use group decision settings to prime social and collective goals

32 Acknowledgements National Science Foundation grants SES , SES , SES Colleagues at Center for Research on Environmental Decisions (CRED), in particular David Krantz and Eric Johnson

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