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Environmental policy design and analysis in the context of reference-dependent preferences: A literature review

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  • Katherine Hassett

Abstract

Reference-dependent preferences - individuals’ tendency to make decisions based on how potential outcomes compare to a reference point - can have important implications for environmental policy design and analysis. This paper reviews the empirical literature to understand how reference dependence affects how individuals engage with environmental incentives, adopt new technologies, participate in environmental markets and support environmental policies. Based on this evidence, it examines the implications of reference dependence for environmental policies and identifies areas for future research.

Suggested Citation

  • Katherine Hassett, 2025. "Environmental policy design and analysis in the context of reference-dependent preferences: A literature review," OECD Environment Working Papers 267, OECD Publishing.
    • Handle: RePEc:oec:envaaa:267-en
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    Keywords

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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D10 - Microeconomics - - Household Behavior - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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