IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v137y2020ics0301421519307220.html
   My bibliography  Save this article

A policy utility dislocation model based on prospect theory: A case study of promoting policies with low-carbon lifestyle

Author

Listed:
  • Cheng, Xiu
  • Long, Ruyin
  • Chen, Hong

Abstract

A low-carbon lifestyle is an inevitable choice for mitigating climate change. However, in the actual situation where policy makers and policy target groups are separated from each other, low-carbon lifestyle changes are often manifested as individual strong government actions, behind which social actions are seriously lagging. Based on this observation, in this study a concept of policy utility dislocation was developed, and a policy utility dislocation model was constructed based on prospect theory. Numerical simulation showed that policy utility dislocation can be reduced by increasing the proportion of residents’ environmental benefits, government efforts and subsidies, and reducing the cost of implementing a low-carbon lifestyle for residents. In particular, when the environmental benefits of the government and residents accounted for 15% and 65%, respectively, or the subsidy coefficient was 2, the policy utility dislocation became zero. In addition, policy utility dislocation began to appear when the cost of implementing a low carbon lifestyle exceeded 3. This study enriches the connotation of policy utility and quantifies the policy utility dislocation, and provides new ways to launch policies that promote low-carbon lifestyles.

Suggested Citation

  • Cheng, Xiu & Long, Ruyin & Chen, Hong, 2020. "A policy utility dislocation model based on prospect theory: A case study of promoting policies with low-carbon lifestyle," Energy Policy, Elsevier, vol. 137(C).
    • Handle: RePEc:eee:enepol:v:137:y:2020:i:c:s0301421519307220
    DOI: 10.1016/j.enpol.2019.111134
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421519307220
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2019.111134?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Syngjoo Choi & Shachar Kariv & Wieland M?ller & Dan Silverman, 2014. "Who Is (More) Rational?," American Economic Review, American Economic Association, vol. 104(6), pages 1518-1550, June.
    2. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 375-406.
    3. Shiming Deng & Candace A. Yano, 2006. "Joint Production and Pricing Decisions with Setup Costs and Capacity Constraints," Management Science, INFORMS, vol. 52(5), pages 741-756, May.
    4. Prieto, Marc & Caemmerer, Barbara & Baltas, George, 2015. "Using a hedonic price model to test prospect theory assertions: The asymmetrical and nonlinear effect of reliability on used car prices," Journal of Retailing and Consumer Services, Elsevier, vol. 22(C), pages 206-212.
    5. Daniel Kahneman & Robert Sugden, 2005. "Experienced Utility as a Standard of Policy Evaluation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(1), pages 161-181, September.
    6. Wang, Qunwei & Su, Bin & Sun, Jiasen & Zhou, Peng & Zhou, Dequn, 2015. "Measurement and decomposition of energy-saving and emissions reduction performance in Chinese cities," Applied Energy, Elsevier, vol. 151(C), pages 85-92.
    7. Loewenstein, George & Ubel, Peter A., 2008. "Hedonic adaptation and the role of decision and experience utility in public policy," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1795-1810, August.
    8. Thierry Post & Martijn J. van den Assem & Guido Baltussen & Richard H. Thaler, 2008. "Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show," American Economic Review, American Economic Association, vol. 98(1), pages 38-71, March.
    9. Minoru Nakada, 2010. "Environmental Tax Reform and Growth: Income Tax Cuts or Profits Tax Reduction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(4), pages 549-565, December.
    10. Paul G. Bain & Matthew J. Hornsey & Renata Bongiorno & Carla Jeffries, 2012. "Promoting pro-environmental action in climate change deniers," Nature Climate Change, Nature, vol. 2(8), pages 600-603, August.
    11. Mohammed Abdellaoui & Han Bleichrodt & Corina Paraschiv, 2007. "Loss Aversion Under Prospect Theory: A Parameter-Free Measurement," Management Science, INFORMS, vol. 53(10), pages 1659-1674, October.
    12. Yu, Shiwei & Agbemabiese, Lawrence & Zhang, Junjie, 2016. "Estimating the carbon abatement potential of economic sectors in China," Applied Energy, Elsevier, vol. 165(C), pages 107-118.
    13. Zhang, Lei & Qin, Quande, 2018. "China’s new energy vehicle policies: Evolution, comparison and recommendation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 110(C), pages 57-72.
    14. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
    15. Armstrong, John H., 2019. "Modeling effective local government climate policies that exceed state targets," Energy Policy, Elsevier, vol. 132(C), pages 15-26.
    16. , J. & ,, 2011. "The evolution of decision and experienced utility," Theoretical Economics, Econometric Society, vol. 6(3), September.
    17. Devin G. Pope & Maurice E. Schweitzer, 2011. "Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes," American Economic Review, American Economic Association, vol. 101(1), pages 129-157, February.
    18. Cheng, Xiu & Long, Ruyin & Chen, Hong & Yang, Jiahui, 2019. "Does social interaction have an impact on residents’ sustainable lifestyle decisions? A multi-agent stimulation based on regret and game theory," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
    19. Paul G. Bain & Matthew J. Hornsey & Renata Bongiorno & Carla Jeffries, 2012. "Promoting pro-environmental action in climate change deniers," Nature Climate Change, Nature, vol. 2(8), pages 603-603, August.
    20. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    21. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, March.
    22. Tamura, Hiroyuki, 2005. "Behavioral models for complex decision analysis," European Journal of Operational Research, Elsevier, vol. 166(3), pages 655-665, November.
    23. Tigran Melkonyan & Zvi Safra, 2016. "Intrinsic Variability in Group and Individual Decision Making," Management Science, INFORMS, vol. 62(9), pages 2651-2667, September.
    24. Chorus, Caspar G. & de Jong, Gerard C., 2011. "Modeling experienced accessibility for utility-maximizers and regret-minimizers," Journal of Transport Geography, Elsevier, vol. 19(6), pages 1155-1162.
    25. Duarte, Rosa & Feng, Kuishuang & Hubacek, Klaus & Sánchez-Chóliz, Julio & Sarasa, Cristina & Sun, Laixiang, 2016. "Modeling the carbon consequences of pro-environmental consumer behavior," Applied Energy, Elsevier, vol. 184(C), pages 1207-1216.
    26. Welsch, Heinz & Kühling, Jan, 2010. "Pro-environmental behavior and rational consumer choice: Evidence from surveys of life satisfaction," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 405-420, June.
    27. Mohammed Abdellaoui & Han Bleichrodt & Olivier L’haridon & Dennie van Dolder, 2016. "Measuring Loss Aversion under Ambiguity: A Method to Make Prospect Theory Completely Observable," Post-Print halshs-01242616, HAL.
    28. Paul Dolan & Daniel Kahneman, 2008. "Interpretations Of Utility And Their Implications For The Valuation Of Health," Economic Journal, Royal Economic Society, vol. 118(525), pages 215-234, January.
    29. Yang-Yu Liu & Jose C Nacher & Tomoshiro Ochiai & Mauro Martino & Yaniv Altshuler, 2014. "Prospect Theory for Online Financial Trading," PLOS ONE, Public Library of Science, vol. 9(10), pages 1-7, October.
    30. Han Bleichrodt & Martin Filko & Amit Kothiyal & Peter P. Wakker, 2017. "Making Case-Based Decision Theory Directly Observable," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 123-151, February.
    31. Štreimikienė, Dalia & Balezentis, Tomas, 2016. "Kaya identity for analysis of the main drivers of GHG emissions and feasibility to implement EU “20–20–20” targets in the Baltic States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1108-1113.
    32. Fang, Guochang & Tian, Lixin & Fu, Min & Sun, Mei, 2014. "Government control or low carbon lifestyle? – Analysis and application of a novel selective-constrained energy-saving and emission-reduction dynamic evolution system," Energy Policy, Elsevier, vol. 68(C), pages 498-507.
    33. Li, Wenbo & Long, Ruyin & Chen, Hong, 2016. "Consumers’ evaluation of national new energy vehicle policy in China: An analysis based on a four paradigm model," Energy Policy, Elsevier, vol. 99(C), pages 33-41.
    34. Bentham, Jeremy, 1781. "An Introduction to the Principles of Morals and Legislation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number bentham1781.
    35. Yang-Yu Liu & Jose C. Nacher & Tomoshiro Ochiai & Mauro Martino & Yaniv Altshuler, 2014. "Prospect Theory for Online Financial Trading," Papers 1402.6393, arXiv.org, revised Mar 2014.
    36. Yuan, Xueliang & Liu, Xin & Zuo, Jian, 2015. "The development of new energy vehicles for a sustainable future: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 298-305.
    37. Brent A Field & Cara L Buck & Samuel M McClure & Leigh E Nystrom & Daniel Kahneman & Jonathan D Cohen, 2015. "Attentional Modulation of Brain Responses to Primary Appetitive and Aversive Stimuli," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-13, July.
    38. Dakshina G. De Silva & Rachel A. J. Pownall, 2014. "Going green: does it depend on education, gender or income?," Applied Economics, Taylor & Francis Journals, vol. 46(5), pages 573-586, February.
    39. Long, Yin & Yoshida, Yoshikuni & Zhang, Runsen & Sun, Lu & Dou, Yi, 2018. "Policy implications from revealing consumption-based carbon footprint of major economic sectors in Japan," Energy Policy, Elsevier, vol. 119(C), pages 339-348.
    40. Xiaoyang Long & Javad Nasiry, 2015. "Prospect Theory Explains Newsvendor Behavior: The Role of Reference Points," Management Science, INFORMS, vol. 61(12), pages 3009-3012, December.
    41. Zhang, Xiaoling & Wang, Yue, 2017. "How to reduce household carbon emissions: A review of experience and policy design considerations," Energy Policy, Elsevier, vol. 102(C), pages 116-124.
    42. Nicholas C. Barberis, 2012. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," NBER Working Papers 18621, National Bureau of Economic Research, Inc.
    43. Hayashida, Tomohiro & Nishizaki, Ichiro & Ueda, Yoshifumi, 2010. "Multiattribute utility analysis for policy selection and financing for the preservation of the forest," European Journal of Operational Research, Elsevier, vol. 200(3), pages 833-843, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wenchun Ran & Ling Zhang, 2023. "Bridging the intention-behavior gap in mobile phone recycling in China: the effect of consumers’ price sensitivity and proactive personality," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(1), pages 938-959, January.
    2. Duan, Mimi & Li, Lingyan & Liu, Xiaojun & Pei, Jiajia & Song, Huihui, 2023. "Turning awareness into behavior: Meta-analysis of household residential life energy transition behavior from the dual perspective of internal driving forces and external inducing forces," Energy, Elsevier, vol. 279(C).
    3. Atsushi Watabe & Alice Marie Yamabe-Ledoux, 2023. "Low-Carbon Lifestyles beyond Decarbonisation: Toward a More Creative Use of the Carbon Footprinting Method," Sustainability, MDPI, vol. 15(5), pages 1-28, March.
    4. Zhongwei Zhu & Tingyu Qian & Lei Liu, 2023. "Evolutionary Simulation of Carbon-Neutral Behavior of Urban Citizens in a “Follow–Drive” Perspective," Sustainability, MDPI, vol. 15(13), pages 1-28, July.
    5. Arunodaya Raj Mishra & Ayushi Chandel & Parvaneh Saeidi, 2022. "Low-carbon tourism strategy evaluation and selection using interval-valued intuitionistic fuzzy additive ratio assessment approach based on similarity measures," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(5), pages 7236-7282, May.
    6. Cheng, Xiu & Wu, Fan & Long, Ruyin & Li, Wenbo, 2021. "Uncovering the effects of learning capacity and social interaction on the experienced utility of low-carbon lifestyle guiding policies," Energy Policy, Elsevier, vol. 154(C).
    7. Song, Yan & Zhang, Lu & Zhang, Ming, 2022. "Research on the impact of public climate policy cognition on low-carbon travel based on SOR theory—Evidence from China," Energy, Elsevier, vol. 261(PA).
    8. Lin, Boqiang & Wang, Xia, 2021. "Does low-carbon travel intention really lead to actual low-carbon travel? Evidence from urban residents in China," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 743-756.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yaman, F. & Cubi-Molla, P. & Ungureanu, S., 2019. "Which Decision Theory Describes Life Satisfaction Best? Evidence from Annual Panel Data," Working Papers 19/12, Department of Economics, City University London.
    2. Fırat Yaman & Patricia Cubí-Mollá & Sergiu Ungureanu, 2023. "Which Decision Theory Describes Life Satisfaction Best? Evidence from Annual Panel Data," Journal of Happiness Studies, Springer, vol. 24(3), pages 893-916, March.
    3. Koen Decancq & Marc Fleurbaey & Erik Schokkaert, 2015. "Happiness, Equivalent Incomes and Respect for Individual Preferences," Economica, London School of Economics and Political Science, vol. 82, pages 1082-1106, December.
    4. Powdthavee, Nattavudh & van den Berg, Bernard, 2011. "Putting different price tags on the same health condition: Re-evaluating the well-being valuation approach," Journal of Health Economics, Elsevier, vol. 30(5), pages 1032-1043.
    5. Alex Markle & George Wu & Rebecca White & Aaron Sackett, 2018. "Goals as reference points in marathon running: A novel test of reference dependence," Journal of Risk and Uncertainty, Springer, vol. 56(1), pages 19-50, February.
    6. Carter, Steven & McBride, Michael, 2013. "Experienced utility versus decision utility: Putting the ‘S’ in satisfaction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 42(C), pages 13-23.
    7. Ariane Charpin, 2018. "Tests des modèles de décision en situation de risque. Le cas des parieurs hippiques en France," Revue économique, Presses de Sciences-Po, vol. 69(5), pages 779-803.
    8. Eil, David & Lien, Jaimie W., 2014. "Staying ahead and getting even: Risk attitudes of experienced poker players," Games and Economic Behavior, Elsevier, vol. 87(C), pages 50-69.
    9. Kpegli, Yao Thibaut & Corgnet, Brice & Zylbersztejn, Adam, 2023. "All at once! A comprehensive and tractable semi-parametric method to elicit prospect theory components," Journal of Mathematical Economics, Elsevier, vol. 104(C).
    10. Per Engström & Katarina Nordblom & Henry Ohlsson & Annika Persson, 2015. "Tax Compliance and Loss Aversion," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 132-164, November.
    11. Adler, Matthew D. & Dolan, Paul & Henwood, Amanda & Kavetsos, Georgios, 2022. "“Better the devil you know”: Are stated preferences over health and happiness determined by how healthy and happy people are?," Social Science & Medicine, Elsevier, vol. 303(C).
    12. Mukuria, Clara & Brazier, John, 2013. "Valuing the EQ-5D and the SF-6D health states using subjective well-being: A secondary analysis of patient data," Social Science & Medicine, Elsevier, vol. 77(C), pages 97-105.
    13. Raj Chetty, 2015. "Behavioral Economics and Public Policy: A Pragmatic Perspective," American Economic Review, American Economic Association, vol. 105(5), pages 1-33, May.
    14. Norbert Hirschauer & Mira Lehberger & Oliver Musshoff, 2015. "Happiness and Utility in Economic Thought—Or: What Can We Learn from Happiness Research for Public Policy Analysis and Public Policy Making?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(3), pages 647-674, April.
    15. Nicholas C. Barberis, 2013. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 173-196, Winter.
    16. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute of Labor Economics (IZA).
    17. Matthew Gould & Matthew D. Rablen, 2019. "Are World Leaders Loss Averse?," CESifo Working Paper Series 7763, CESifo.
    18. Christina Aperjis & Filippo Balestrieri, 2017. "Loss aversion leading to advantageous selection," Journal of Risk and Uncertainty, Springer, vol. 55(2), pages 203-227, December.
    19. Nicholas C. Barberis, 2012. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," NBER Working Papers 18621, National Bureau of Economic Research, Inc.
    20. Rabaa, Simon & Geisendorf, Sylvie & Wilken, Robert, 2022. "Why change does (not) happen: Understanding and overcoming status quo biases in climate change mitigation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 45(1), pages 100-134.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:137:y:2020:i:c:s0301421519307220. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.