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

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  • 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
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