The behavioural economics of climate change

Brekke, Kjell Arne; Johansson‐Stenman, Olof

doi:10.1093/oxrep/grn012

Cited by 160 publications

(77 citation statements)

References 69 publications

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“…Also, several studies in the experimental and behavioral economics literature concern climate change, offering important insights regarding the behavior of individuals and nations regarding climate change (specifically, Brekke and Johansson-Stenman 2008). Such results are related to the effect of conditional cooperation (e.g., Gächter 2007;Fischbacher, Gächter, and Fehr 2001), reciprocity (e.g., Falk and Fischbacher 2006;Fehr and Gächter 2000b), and trust (e.g., Gächter, Herrmann, and Thöni 2004).…”

Section: Introductionmentioning

confidence: 99%

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Climate change in a public goods game: Investment decision in mitigation versus adaptation

Hasson

Löfgren²,

Visser

2010

Ecological Economics

100

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We use behavioral and experimental economics to study a particular aspect of the economics of climate change: the potential tradeoff between countries' investments in mitigation versus adaptation.While mitigation of greenhouse gases can be viewed as a public good, adaptation to climate change is a private good, benefiting only the country or the individual that invests in adaptation. We use a one-shot public-goods game that deviates from the standard public-goods game by introducing a stochastic term to account for probabilistic destruction in a climate-change setting. Probability density function is mapped to within-group levels of mitigation. We compare low-vulnerability and high-vulnerability treatments by varying the magnitude of disaster across treatments. Our results show that there is no significant difference in the level of mitigation across these treatments. Further, our results emphasize the important role of trust in enhancing cooperation.

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Section: Introductionmentioning

confidence: 99%

“…Also, it is not clear from existing research whether countries would be more or less cooperative than individuals. (See the discussion in Brekke and Johansson-Stenman [2008].) The subjects in the current experiment were specifically asked to think of themselves as a country's policymaker charged with dealing with climate change.…”

Section: Introductionmentioning

confidence: 99%

Climate change in a public goods game: Investment decision in mitigation versus adaptation

Hasson

Löfgren²,

Visser

2010

Ecological Economics

100

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“…How do various actors respond to the effects of climate change and the incentives set by climate policies? For climate policy recommendations, most economists have used standard economic approaches based on the assumptions of the homo oeconomicus and rational decision making -although many scholars have argued that models from behavioural economics provide a more realistic description of observed behaviour in environmental issues (van den Bergh et al 2000;Brekke and Johansson-Stenman 2008;Gowdy 2008;Gsottbauer and van den Bergh 2010;Shogren et al 2010;Shogren and Taylor 2008;Venkatachalam 2008). This paper joins the debate on behavioural economics in climate change mitigation and adaptation.…”

Section: Introductionmentioning

confidence: 95%

Prospect theory, mitigation and adaptation to climate change

Osberghaus

2016

Journal of Risk Research

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractClimate change is one of the most pressing challenges in current environmental policy. Appropriate policies intended to stimulate efficient adaptation and mitigation should not exclusively rely on the assumption of the homo oeconomicus, but take advantage of well-researched alternative behavioural patterns. Prospect theory provides a number of climate-relevant insights, such as the notion that evaluations of outcomes are reference dependent, and the relevance of perceived certainty of outcomes. This paper systematically reviews what prospect theory can offer to analyse mitigation and adaptation. It is shown that accounting for reference dependence and certainty effects contributes to a better understanding of some well-known puzzles in the climate debate, including (but not limited to) the different uptake of mitigation and adaptation amongst individuals and nations, the role of technical vs. financial adaptation, and the apparent preference for hard protection measures in coastal adaptation. Finally, concrete possibilities for empirical research on these effects are proposed.

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“…The challenge of reconciling these different rates is known as the "equity premium puzzle" (Mehra and Prescott, 1985). Quiggin (2008) and Brekke and Johansson-Stenman (2008) offer commentary on the significance of the equity premium puzzle to the climate change discounting debate. If a lower market rate is chosen, such as that of bonds, then the discount rates chosen by the common descriptive and prescriptive approaches become quite similar.…”

Section: The Common Descriptive Approachmentioning

confidence: 99%

Description, prescription and the choice of discount rates

Baum

2009

Ecological Economics

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The choice of discount rates is a key issue in the analysis of long-term societal issues, in particular environmental issues such as climate change. Approaches to choosing discount rates are generally placed into two categories: the descriptive approach and the prescriptive approach. The descriptive approach is often justified on grounds that it uses a description of how society discounts instead of having analysts impose their own discounting views on society. This paper analyzes the common forms of the descriptive and prescriptive approaches and finds that, in contrast with customary thinking, both forms are equally descriptive and prescriptive. The prescriptions concern who has standing (i.e. who is included) in society, how the views of these individuals are measured, and how the measurements are aggregated. Such prescriptions are necessary to choose from among the many possible descriptions of how society discounts. The descriptions are the measurements made given a choice of measurement technique. Thus, the labels "descriptive approach" and "prescriptive approach" are deeply misleading, as analysts cannot avoid imposing their own views on society.

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The behavioural economics of climate change

Cited by 160 publications

References 69 publications

Climate change in a public goods game: Investment decision in mitigation versus adaptation

Climate change in a public goods game: Investment decision in mitigation versus adaptation

Prospect theory, mitigation and adaptation to climate change

Description, prescription and the choice of discount rates

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