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Social Preferences and Environmental Externalities

Author

Listed:
  • Pol Campos-Mercade
  • Claes Ek
  • Magnus Soderberg
  • Florian H. Schneider

Abstract

Standard economic theory assumes that consumers ignore the externalities they create, such as emissions from burning fossil fuels and generating waste. In an incentivized study (N = 3, 718), we find that most people forgo substantial gains to avoid imposing negative externalities on others. Using administrative data on household waste, we show a clear link between such prosociality and waste behavior: prosociality predicts lower residual waste generation and higher waste sorting. Prosociality also predicts survey-reported pro-environmental behaviors such as lowering indoor temperature, limiting air travel, and consuming eco-friendly products. These findings highlight the importance of considering social preferences in environmental policy.

Suggested Citation

  • Pol Campos-Mercade & Claes Ek & Magnus Soderberg & Florian H. Schneider, 2025. "Social Preferences and Environmental Externalities," CESifo Working Paper Series 11895, CESifo.
    • Handle: RePEc:ces:ceswps:_11895
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp11895.pdf
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    More about this item

    Keywords

    social preferences; prosociality; environmental behaviors; externalities;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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