The Role of Behavioural Economics in Energy and Climate Policy

This article explores how behavioural economics can be applied to energy and climate policy. We present an overview of main concepts of behavioural economics and discuss how they differ from the assumptions of neoclassical economics. Next, we discuss how behavioural economics applies to three areas of energy policy: (1) consumption and habits, (2) investment in energy efficiency, and (3) provision of public goods and support for pro-environmental behaviour. We conclude that behavioural economics seems unlikely to provide the magic bullet to reduce energy consumption by the magnitude required by the International Energy Agency's “450” climate policy scenario. However it offers new suggestions as to where to start looking for potentially sustainable changes in energy consumption. We believe that the most useful role within climate policy is in addressing issues of public perception of the affordability of climate policy and in facilitating the creation of a more responsive energy demand, better capable of responding to weather-induced changes in renewable electricity supply

Punishment - and beyond

This paper argues that the “Economics of Crime” concentrates too much on punishment as a policy to fight crime, which is unwise for several reasons. There are important instances in which punishment simply cannot reduce crime. Several feasible alternatives to punishment exist, such as offering positive incentives or handing out awards for law abiding behavior. These alternative approaches tend to create a positive sum environment. When people appreciate living in a society that is to a large extent law abiding, they are more motivated to observe the law.crime, punishment, incentives, motivation, framing, broken window theory

No Longer Without a Reward: Do Digital Rewards Crowd Out Intrinsic Motivation of Young Children?

In the learning journey of young children, rewards are ubiquitous. Yet, psychologists and behavioral economists question the success of rewards and even claim that they displace intrinsic motivation, a phenomenon referred to as motivation crowding out. While information systems can help children learn everyday tasks, it is unclear if and when digital rewards produce motivation crowding out. Theoretically sound, empirical field studies on this topic are lacking and existing information system research on motivation crowding is limited to specific domains, not covering children’s behavior. Therefore, we aim to elicit how digital rewards influence an everyday health behavior that children learn in kindergarten – handwashing – and the underlying intrinsic motivation. We conduct a randomized controlled trial that is conceptualized in this paper. Our results will extend motivation crowding theory in the context of young children and inform the design of digital behavior change interventions

Investigation into intrinsic motivation and reputational concerns in the public sector

This thesis was submitted for the degree of Docter of Philosophy and awarded by Brunel University on 22nd December 2009.The objective of this thesis is to provide both empirical evidence and theoretical explanations that will show the positive and negative effects of intrinsic motivation and reputational concerns in the public sector. The thesis argues that by having intrinsically motivated individuals in the public sector (i.e. individuals that are public service motivated), the government can provide higher quality public goods and services at a lower cost. The thesis finds empirical evidence for the existence of public service motivation and also finds that high extrinsic rewards in the public sector deter individuals with high levels of public service motivation from joining the public sector. There is also empirical evidence showing that individuals remain public service motivated in the long term. This thesis also investigates whether the reputational concerns of a principal (government) can lead to under provision of quality improving effort by contracted firms in procurement contracts. The thesis finds that reputational concerns cause the decision maker to intervene in procurement projects more frequently than is optimal. This then results in the contracted private firm exerting less effort to produce quality improving firm specific investments. Since public service motivation can improve the delivery of public goods and services, these findings lead us to conclude that governments must find ways to recruit a larger proportion of public service motivated individuals into the public sector. These findings also highlight the importance of reputational concerns in the decision making process of governments. They show us that reputational concerns can have very negative effects on procurement contracts

The role of behavioural economics in energy and climate policy

This article explores how behavioural economics can be applied to energy and climate policy. We present an overview of main concepts of behavioural economics and discuss how they differ from the assumptions of neoclassical economics. Next, we discuss how behavioural economics applies to three areas of energy policy: (1) consumption and habits, (2) investment in energy efficiency, and (3) provision of public goods and support for pro-environmental behaviour. We conclude that behavioural economics seems unlikely to provide the magic bullet to reduce energy consumption by the magnitude required by the International Energy Agency's “450” climate policy scenario. However it offers new suggestions as to where to start looking for potentially sustainable changes in energy consumption. We believe that the most useful role within climate policy is in addressing issues of public perception of the affordability of climate policy and in facilitating the creation of a more responsive energy demand, better capable of responding to weather-induced changes in renewable electricity supply

Crowding-in or crowding-out: the contribution of self-determination theory to public service motivation

The relationship between monetary rewards and public service motivation (PSM) has been at the centre of public management research for several decades. Yet the role of performance-contingent rewards in motivating individuals to engage in public service behaviour remains largely contested. This conceptual study aims to reconcile inconsistencies in the literature by considering particular conditions under which performance-contingent incentives may effectively sustain PSM. Drawing on self-determination theory, this study offers a detailed map of the factors that can explain the relationship between performance-related rewards and PSM, while also reconciling contradictory research findings to date and making several propositions for empirical research

Behind the Veil of Legal Uncertainty

This article challenges the conventional view and proclaims the advantages of legal uncertainty. This article recognized some of the drawbacks may arise due to uncertainty and hence illustrated several refinements and limitations regarding the use of a veil of uncertainty mechanism in order to improve its potential benefits for lawmakers

How laws affect behavior : Obligations, incentives and cooperative behavior

Laws and other formal rules are ‘obligations backed by incentives’. In this paper we explore how formal rules affect cooperative behavior. Our analysis is based on a series of experimental public good games designed to isolate the impact of exogenously requested minimum contributions (obligations) from those of the marginal incentives backing them. We find that obligations have a sizeable effect on cooperative behavior even in the absence of incentives. When non-binding incentives are introduced, requested contributions strongly sustain cooperation. Therefore, in contrast with cases in which incentives crowd-out cooperative behavior, in our experiments obligations and incentives are complementary, jointly supporting high levels of contributions. Moreover, we find that variations in obligations affect behavior even when incentives are held constant. Finally, we explore the behavioral channels of the previous results, finding that people's beliefs about others’ contributions and the willingness to cooperate are both called into play