IDEAS home Printed from https://ideas.repec.org/p/old/dpaper/441.html
   My bibliography  Save this paper

Why is Satisfaction from Pro-Environmental Behaviors Increasing in Costs? Insights from the Rational-Choice Decision-Error Framework

Author

Listed:
  • Heinz Welsch

    (University of Oldenburg, Department of Economics)

Abstract

The literature on subjective well-being (SWB) and the environment has found robust evidence of positive net marginal SWB from pro-environmental behavior (PEB), that is, positive marginal SWB net of the associated costs in terms of money, time and effort (Finding 1). Accordingly, people could increase their SWB (utility) by behaving more pro-environmentally. In addition, net marginal SWB was found to be larger with respect to more costly than with respect to less costly PEBs (Finding 2). Finding 1 is at odds with rational choice theory’s demand that marginal utility be equalized with marginal costs, that is, net marginal utility be zero. The finding can be (and has been) explained by decision error, that is, a failure in forecasting the well-being consequences of an act of choice. This paper uses the rational-choice decision-error framework to show that if (i) observed levels of PEB are the result of rational choice and (ii) there is positive net marginal SWB at observed PEB levels due to decision error, then net marginal SWB from a PEB is increasing in its marginal costs. The ability of the rational-choice decision error framework to explain not only Finding 1 but Finding 2 provides empirical support for that framework.

Suggested Citation

  • Heinz Welsch, 2023. "Why is Satisfaction from Pro-Environmental Behaviors Increasing in Costs? Insights from the Rational-Choice Decision-Error Framework," Working Papers V-441-23, University of Oldenburg, Department of Economics, revised May 2023.
    • Handle: RePEc:old:dpaper:441
    as

    Download full text from publisher

    File URL: http://www.uni-oldenburg.de/fileadmin/user_upload/wire/fachgebiete/vwl/V-441-23.pdf
    File Function: First version, 2023
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias in Predicting Future Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1209-1248.
    2. Videras Julio R & Owen Ann L, 2006. "Public Goods Provision and Well-Being: Empirical Evidence Consistent with the Warm Glow Theory," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-40, April.
    3. Jeffrey Jacob & Emily Jovic & Merlin Brinkerhoff, 2009. "Personal and Planetary Well-being: Mindfulness Meditation, Pro-environmental Behavior and Personal Quality of Life in a Survey from the Social Justice and Ecological Sustainability Movement," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 93(2), pages 275-294, September.
    4. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    5. Kirk Brown & Tim Kasser, 2005. "Are Psychological and Ecological Well-being Compatible? The Role of Values, Mindfulness, and Lifestyle," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 74(2), pages 349-368, November.
    6. Schmitt, Michael T. & Aknin, Lara B. & Axsen, Jonn & Shwom, Rachael L., 2018. "Unpacking the Relationships Between Pro-environmental Behavior, Life Satisfaction, and Perceived Ecological Threat," Ecological Economics, Elsevier, vol. 143(C), pages 130-140.
    7. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 375-406.
    8. Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
    9. David Maddison & Katrin Rehdanz & Heinz Welsch (ed.), 2020. "Handbook on Wellbeing, Happiness and the Environment," Books, Edward Elgar Publishing, number 18339.
    10. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    11. Sexton, Steven E. & Sexton, Alison L., 2014. "Conspicuous conservation: The Prius halo and willingness to pay for environmental bona fides," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 303-317.
    12. Thilo K.G. Haverkamp & Heinz Welsch & Andreas Ziegler, 2022. "The Relationship between Pro-environmental Behavior, Economic Preferences, and Life Satisfaction: Empirical Evidence from Germany," MAGKS Papers on Economics 202204, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Jing Xiao & Haifeng Li, 2011. "Sustainable Consumption and Life Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 104(2), pages 323-329, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Binder & Ann-Kathrin Blankenberg & Heinz Welsch, 2020. "Pro-environmental Norms, Green Lifestyles, and Subjective Well-Being: Panel Evidence from the UK," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(3), pages 1029-1060, December.
    2. Martin Binder & Ann-Kathrin Blankenberg & Heinz Welsch, 2019. "Pro-environmental norms and subjective well-being: panel evidence from the UK," Working Papers V-417-19, University of Oldenburg, Department of Economics, revised Jan 2019.
    3. Schmitt, Michael T. & Aknin, Lara B. & Axsen, Jonn & Shwom, Rachael L., 2018. "Unpacking the Relationships Between Pro-environmental Behavior, Life Satisfaction, and Perceived Ecological Threat," Ecological Economics, Elsevier, vol. 143(C), pages 130-140.
    4. Binder, Martin & Blankenberg, Ann-Kathrin & Guardiola, Jorge, 2020. "Does it have to be a sacrifice? Different notions of the good life, pro-environmental behavior and their heterogeneous impact on well-being," Ecological Economics, Elsevier, vol. 167(C).
    5. Binder, Martin & Blankenberg, Ann-Kathrin, 2017. "Green lifestyles and subjective well-being: More about self-image than actual behavior?," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 304-323.
    6. Nazaret Ibáñez-Rueda & Mònica Guillén-Royo & Jorge Guardiola, 2020. "Pro-Environmental Behavior, Connectedness to Nature, and Wellbeing Dimensions among Granada Students," Sustainability, MDPI, vol. 12(21), pages 1-16, November.
    7. Welsch, Heinz & Binder, Martin & Blankenberg, Ann-Kathrin, 2021. "Green behavior, green self-image, and subjective well-being: Separating affective and cognitive relationships," Ecological Economics, Elsevier, vol. 179(C).
    8. Welsch, Heinz & Kühling, Jan, 2010. "Pro-environmental behavior and rational consumer choice: Evidence from surveys of life satisfaction," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 405-420, June.
    9. repec:old:wpaper:322 is not listed on IDEAS
    10. Heinz Welsch & Jan Kuehling, 2017. "How Green Self Image Affects Subjective Well-Being: Pro-Environmental Values as a Social Norm," Working Papers V-404-17, University of Oldenburg, Department of Economics, revised Oct 2017.
    11. Welsch, Heinz, 2009. "Implications of happiness research for environmental economics," Ecological Economics, Elsevier, vol. 68(11), pages 2735-2742, September.
    12. E. Chéron & L. Sudbury-Riley & F. Kohlbacher, 2022. "In Pursuit of Happiness: Disentangling Sustainable Consumption, Consumer Alienation, and Social Desirability," Journal of Consumer Policy, Springer, vol. 45(2), pages 149-173, June.
    13. Heinz Welsch & Jan Kühling, 2010. "Is Pro-Environmental Consumption Utility-Maximizing? Evidence from Subjective Well-Being Data," Working Papers V-322-10, University of Oldenburg, Department of Economics, revised Apr 2010.
    14. Salvador del Saz Salazar & Luis Pérez y Pérez, 2021. "Exploring the Differential Effect of Life Satisfaction on Low and High-Cost Pro-Environmental Behaviors," IJERPH, MDPI, vol. 19(1), pages 1-17, December.
    15. Welsch, Heinz & Kühling, Jan, 2018. "How Green Self Image is Related to Subjective Well-Being: Pro-Environmental Values as a Social Norm," Ecological Economics, Elsevier, vol. 149(C), pages 105-119.
    16. Dhandra, Tavleen Kaur, 2019. "Achieving triple dividend through mindfulness: More sustainable consumption, less unsustainable consumption and more life satisfaction," Ecological Economics, Elsevier, vol. 161(C), pages 83-90.
    17. repec:zbw:hohpro:322 is not listed on IDEAS
    18. Lane, Tom, 2017. "How does happiness relate to economic behaviour? A review of the literature," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 68(C), pages 62-78.
    19. Thilo K.G. Haverkamp & Heinz Welsch & Andreas Ziegler, 2022. "The Relationship between Pro-environmental Behavior, Economic Preferences, and Life Satisfaction: Empirical Evidence from Germany," MAGKS Papers on Economics 202204, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    20. Welsch, Heinz & Kühling, Jan, 2011. "Are pro-environmental consumption choices utility-maximizing? Evidence from subjective well-being data," Ecological Economics, Elsevier, vol. 72(C), pages 75-87.
    21. Fırat Yaman & Patricia Cubí-Mollá & Sergiu Ungureanu, 2023. "Which Decision Theory Describes Life Satisfaction Best? Evidence from Annual Panel Data," Journal of Happiness Studies, Springer, vol. 24(3), pages 893-916, March.
    22. Akay, Alpaslan & Bargain, Olivier & Jara, Xavier, 2017. "Back to Bentham, Should We? Large-Scale Comparison of Experienced versus Decision Utility," IZA Discussion Papers 10907, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    pro-environmental behavior; subjective well-being; decision error; rational choice; affective forecasting;
    All these keywords.

    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:old:dpaper:441. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catharina Schramm (email available below). General contact details of provider: https://edirc.repec.org/data/fwoldde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.