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Aiding Decision Making to Reduce the Impacts of Climate Change

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  • Howard Kunreuther
  • Elke Weber

Abstract

Utilizing theory and empirical insights from psychology and behavioural economics, this paper examines individuals’ cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits, and behavioural biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures. Copyright Springer Science+Business Media New York 2014

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  • Howard Kunreuther & Elke Weber, 2014. "Aiding Decision Making to Reduce the Impacts of Climate Change," Journal of Consumer Policy, Springer, vol. 37(3), pages 397-411, September.
    • Handle: RePEc:kap:jcopol:v:37:y:2014:i:3:p:397-411
    DOI: 10.1007/s10603-013-9251-z
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    Cited by:

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    3. Cardella, Eric & Ewing, Brad & Williams, Ryan Blake, 2018. "Green is Good – The Impact of Information Nudges on the Adoption of Voluntary Green Power Plans," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266583, Southern Agricultural Economics Association.
    4. W. J. Wouter Botzen & Erwann Michel-Kerjan & Howard Kunreuther & Hans Moel & Jeroen C. J. H. Aerts, 2016. "Political affiliation affects adaptation to climate risks: Evidence from New York City," Climatic Change, Springer, vol. 138(1), pages 353-360, September.
    5. Jae Young Lim & Kuk-Kyoung Moon, 2020. "Perceived Environmental Threats and Pro-Environmental Behaviors: Investigating the Role of Political Participation Using a South Korean Survey," IJERPH, MDPI, vol. 17(9), pages 1-16, May.
    6. Gary D. Libecap, 2014. "Addressing Global Environmental Externalities: Transaction Costs Considerations," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 424-479, June.
    7. Spandagos, Constantine & Yarime, Masaru & Baark, Erik & Ng, Tze Ling, 2020. "“Triple Target” policy framework to influence household energy behavior: Satisfy, strengthen, include," Applied Energy, Elsevier, vol. 269(C).
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    10. Zhuangai Li & Xia Cao, 2021. "Effectiveness of China’s Labeling and Incentive Programs for Household Energy Conservation and Policy Implications," Sustainability, MDPI, vol. 13(4), pages 1-17, February.

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