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Is Pro-Environmental Consumption Utility-Maximizing? Evidence from Subjective Well-Being Data

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Author Info

  • Heinz Welsch

    ()
    (University of Oldenburg, Department of Economics)

  • Jan Kühling

    ()
    (University of Oldenburg, Department of Economics)

Abstract

This paper studies whether pro-environmental consumption choices are consistent with utility maximization and what role the consumption behavior of reference persons and one’s own past behavior play in this context. By combining data on individuals’ pro-environmental consumption from a unique data set with data on subjective well-being, we find that people could attain higher well-being (utility) by unilaterally consuming more environmentally friendly while at the same time reducing the quantity consumed. The distortions identified are smaller when people’s reference persons consume more environmentally friendly and when the individual has a longer environmental friendly consumption history. We therefore conclude that learning from the behavior of others and from one’s own past experience may help alleviate decision error in environment-friendly consumption.

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File URL: http://www.vwl.uni-oldenburg.de/download/V-322-10.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by University of Oldenburg, Department of Economics in its series Working Papers with number V-322-10.

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Length: 36 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
Publication status: Published in Oldenburg Working Papers V-322-10
Handle: RePEc:old:dpaper:322

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Related research

Keywords: pro-environmental; consumption; consumer choice; utility maximization; wellbeing life satisfaction;

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References

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  1. Wier, Mette & O'Doherty Jensen, Katherine & Andersen, Laura Mørch & Millock, Katrin, 2008. "The character of demand in mature organic food markets: Great Britain and Denmark compared," Food Policy, Elsevier, vol. 33(5), pages 406-421, October.
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  10. Welsch, Heinz & Kühling, Jan, 2009. "Determinants of pro-environmental consumption: The role of reference groups and routine behavior," Ecological Economics, Elsevier, vol. 69(1), pages 166-176, November.
  11. 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.
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  16. Howarth, Richard B., 1996. "Status effects and environmental externalities," Ecological Economics, Elsevier, vol. 16(1), pages 25-34, January.
  17. Carroll, Christopher D., 2000. "Solving consumption models with multiplicative habits," Economics Letters, Elsevier, vol. 68(1), pages 67-77, July.
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  20. repec:ebl:ecbull:v:17:y:2002:i:1:p:1-10 is not listed on IDEAS
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