Reconciling Eco and Ego? The Interplay Between Environmental and Image Concerns in Consumption Choices

We explore the interplay between two key individual drivers of green consumption: intrinsic moral concerns for the environment and reputational concerns for social image. Our microeconomic behavioral model characterizes choices among lifestyles differing in environmental impacts (brown/green) and conspicuousness (positional/discreet), depending on how strongly one values each of these motives. We show that image concerns can substitute for environmental concerns in driving green consumption across a limited but central range of preferences, in particular through the purchase of green positional goods. Such conspicuous conservation can green individual consumption (reconciling Eco and Ego), especially among image-sensitive consumers, but it yields environmental benefits only under specific economic conditions. Indeed, the environmental impact of a lifestyle depends critically on its relative impact intensity, i.e., the pollution per dollar spent on this lifestyle, more than on the pollution per unit of the representative good of the lifestyle,driving volume effects and behavioral rebound effects, which both reduce the environmental benefits of green lifestyles. Knowing the collective distribution of preferences may help design targeted policies, as those preferences strongly determine policy effectiveness. Our findings are especially relevant for policies that aim to foster greener consumption choices in different economic contexts (e.g., green nudging, environmental taxes with higher rates on positional goods...).