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Addicted to Oil: Implications for Climate Change Policy


  • Steve Suranovic

    () (Institute for International Economic Policy, George Washington University)


This paper applies a behavioral economics model of cigarette addiction to the issue of oil usage and climate change. Both problems involve consumption of a product that causes long-term detrimental effects and for which current reductions in usage induces an adjustment cost. The paper argues that the problem of oil addiction is much more complex than cigarette addiction and thus may be more difficult to resolve. It also suggests that oil addiction, like cigarette addiction, may generate a long period of time in which individuals express sincere desire to convert to clean energy, but do little to accomplish that outcome. Finally the paper uses the model to argue that policies to reduce the present cost of alternative non-carbon energy sources to induce voluntary adjustments in energy usage are likely to be more effective than an approach to emphasize the long term catastrophic effects of climate change coupled with policies to force changes in current energy consumption.

Suggested Citation

  • Steve Suranovic, 2011. "Addicted to Oil: Implications for Climate Change Policy," Working Papers 2011-22, The George Washington University, Institute for International Economic Policy.
  • Handle: RePEc:gwi:wpaper:2011-22

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    References listed on IDEAS

    1. Attari, Shahzeen Z. & Schoen, Mary & Davidson, Cliff I. & DeKay, Michael L. & Bruine de Bruin, Wändi & Dawes, Robyn & Small, Mitchell J., 2009. "Preferences for change: Do individuals prefer voluntary actions, soft regulations, or hard regulations to decrease fossil fuel consumption?," Ecological Economics, Elsevier, vol. 68(6), pages 1701-1710, April.
    2. Asheim, Geir B. & Froyn, Camilla Bretteville & Hovi, Jon & Menz, Fredric C., 2006. "Regional versus global cooperation for climate control," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 93-109, January.
    3. Dieter Helm, 2008. "Climate-change policy: why has so little been achieved?," Oxford Review of Economic Policy, Oxford University Press, vol. 24(2), pages 211-238, Summer.
    4. Panayotou, Theodore & Sachs, Jeffrey D. & Zwane, Alix Peterson, 2002. "Compensation for "Meaningful Participation" in Climate Change Control: A Modest Proposal and Empirical Analysis," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 437-454, May.
    5. Pittel, Karen & Rübbelke, Dirk T.G., 2008. "Climate policy and ancillary benefits: A survey and integration into the modelling of international negotiations on climate change," Ecological Economics, Elsevier, vol. 68(1-2), pages 210-220, December.
    6. Suranovic, Steven M. & Goldfarb, Robert S. & Leonard, Thomas C., 1999. "An economic theory of cigarette addiction," Journal of Health Economics, Elsevier, vol. 18(1), pages 1-29, January.
    7. Bosetti, Valentina & Buchner, Barbara, 2009. "Data Envelopment Analysis of different climate policy scenarios," Ecological Economics, Elsevier, vol. 68(5), pages 1340-1354, March.
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