Behavioral economics and climate change policy
The policy recommendations of most economists are based on the rational actor model. The emphasis is on achieving efficient allocation by insuring that property rights are completely assigned and that market failures are corrected. This paper takes the position that so-called behavioral "anomalies" are central to human decision-making and, therefore, should be the starting point for effective economic policies. This contention is supported by game theory experiments involving humans and closely related primates. This research suggests that the standard economic approach to climate change policy, with its focus on narrowly rational, self-regarding responses to monetary incentives, is seriously flawed.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gowdy, John M., 2004. "Altruism, evolution, and welfare economics," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 69-73, January.
- Martin L. Weitzman, 2001.
American Economic Review,
American Economic Association, vol. 91(1), pages 260-271, March.
- Martin L. Weitzman, 1998. "Gamma Discounting," Harvard Institute of Economic Research Working Papers 1843, Harvard - Institute of Economic Research.
- Stiglitz Joseph, 2006. "A New Agenda for Global Warming," The Economists' Voice, De Gruyter, vol. 3(7), pages 1-4, July.
- Hall, Darwin C. & Behl, Richard J., 2006. "Integrating economic analysis and the science of climate instability," Ecological Economics, Elsevier, vol. 57(3), pages 442-465, May.
- Wolfgang Pesendorfer, 2006. "Behavioral Economics Comes of Age: A Review Essay on Advances in Behavioral Economics," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 712-721, September.
- Gowdy, John & Iorgulescu, Raluca & Onyeiwu, Stephen, 2003. "Fairness and retaliation in a rural Nigerian village," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 469-479, December.
- Ng, Yew-Kwang, 1997.
"A Case for Happiness, Cardinalism, and Interpersonal Comparability,"
Royal Economic Society, vol. 107(445), pages 1848-58, November.
- Yew-Kwang, Ng, 1997. "A case for Happiness, Cardinalism, and Interpersonal Comparability," Departmental Working Papers _081, Chinese University of Hong Kong, Department of Economics.
- Glimcher, Paul W. & Dorris, Michael C. & Bayer, Hannah M., 2005. "Physiological utility theory and the neuroeconomics of choice," Games and Economic Behavior, Elsevier, vol. 52(2), pages 213-256, August.
- On Amir & Dan Ariely & Alan Cooke & David Dunning & Nicholas Epley & Uri Gneezy & Botond Koszegi & Donald Lichtenstein & Nina Mazar & Sendhil Mullainathan & Drazen Prelec & Eldar Shafir & Jose Silva, 2005. "Psychology, Behavioral Economics, and Public Policy," Marketing Letters, Springer, vol. 16(3), pages 443-454, December.
- Karp, Larry, 2005.
"Global warming and hyperbolic discounting,"
Journal of Public Economics,
Elsevier, vol. 89(2-3), pages 261-282, February.
- Karp, Larry, 2004. "Global Warming and Hyperbolic Discounting," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5zh730nc, Department of Agricultural & Resource Economics, UC Berkeley.
- Karp, Larry S, 2004. "Global warming and hyperbolic discounting," CUDARE Working Paper Series 0934R, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
- David Laibson, 1997.
"Golden Eggs and Hyperbolic Discounting,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 112(2), pages 443-478.
- Daniel Kahneman & Robert Sugden, 2005. "Experienced Utility as a Standard of Policy Evaluation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(1), pages 161-181, 09.
- van den Bergh, Jeroen C. J. M., 2004. "Optimal climate policy is a utopia: from quantitative to qualitative cost-benefit analysis," Ecological Economics, Elsevier, vol. 48(4), pages 385-393, April.
- Daniel Kahneman, 2003. "A Psychological Perspective on Economics," American Economic Review, American Economic Association, vol. 93(2), pages 162-168, May.
- Whyte, Glen, 1993. "Escalating Commitment in Individual and Group Decision Making: A Prospect Theory Approach," Organizational Behavior and Human Decision Processes, Elsevier, vol. 54(3), pages 430-455, April.
- Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
- Ng, Yew-Kwang, 1987. "Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values," American Economic Review, American Economic Association, vol. 77(1), pages 186-91, March.
- Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-55, September.
- Paavola, Jouni & Adger, W. Neil, 2006. "Fair adaptation to climate change," Ecological Economics, Elsevier, vol. 56(4), pages 594-609, April.
- Norgaard, Richard B., 1989. "The case for methodological pluralism," Ecological Economics, Elsevier, vol. 1(1), pages 37-57, February.
- John M. Gowdy, 2004.
"The Revolution in Welfare Economics and Its Implications for Environmental Valuation and Policy,"
University of Wisconsin Press, vol. 80(2), pages 239-257.
- John M. Gowdy, 2003. "The Revolution in Welfare Economics and its Implications for Environmental Valuation and Policy," Rensselaer Working Papers in Economics 0315, Rensselaer Polytechnic Institute, Department of Economics.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
- William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
- Howarth, Richard B., 2006. "Optimal environmental taxes under relative consumption effects," Ecological Economics, Elsevier, vol. 58(1), pages 209-219, June.
- Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
- Jörg Rieskamp & Jerome R. Busemeyer & Barbara A. Mellers, 2006. "Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 631-661, September.
- Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Sustainable use of renewable resources, Chapter 2.1," MPRA Paper 8815, University Library of Munich, Germany.
- Ariel Rubinstein, 2003. ""Economics and Psychology"? The Case of Hyperbolic Discounting," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1207-1216, November.
- Kahn, James Randall & Franceschi, Dina, 2006. "Beyond Kyoto: A tax-based system for the global reduction of greenhouse gas emissions," Ecological Economics, Elsevier, vol. 58(4), pages 778-787, July.
- Gintis, Herbert, 2000. "Beyond Homo economicus: evidence from experimental economics," Ecological Economics, Elsevier, vol. 35(3), pages 311-322, December.
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:68:y:2008:i:3-4:p:632-644. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.