Why Do People Demand Rent Control?

We conduct a representative survey experiment in Germany to understand why people support inefficient policies. In particular, we measure beliefs about and preferences for rent control – a policy that is widely regarded as harmful by experts. To tease out causal mechanisms, we provide randomly selected subsets of participants with empirical estimates about the effects of rent control on rent prices and housing supply and with information about the consensus among economists against rent control. We find that people update their beliefs and that this leads to lower demand for rent control. Left-wingers update their beliefs more strongly, which reduces the ideological gap in support for rent control by about one-third. Providing information about economists’ rejection of this policy leads to the largest reduction in support. However, the main drivers of support for rent control are fairness considerations and profit motives. Our study also highlights the importance of trust in expert advice since treatment effects are consistently larger among those who indicate trust in expert advice. Finally, an obfuscated follow-up survey conducted three weeks later reveals that the effects, both on support for rent control and on beliefs, persist only for those who trust

Financial professionals and climate experts have diverging perspectives on climate action

To address the climate crisis, it is necessary to transform the economy, with the finance industry taking a central role by implementing sustainable investment policies. This study aims to understand the motivations and preferences of its key players—financial professionals and climate experts. Here we use an incentivized experiment to measure the willingness to forgo payout to curb carbon emissions and a survey to elicit attitudes and beliefs toward the climate crisis. We provide suggestive evidence that financial professionals have a lower willingness to curb carbon emissions, are less concerned about climate change, and are less supportive of carbon taxes compared to climate experts. We report differences in motivations and priorities, with financial professionals emphasizing economic and reputational considerations and climate experts prioritizing ecological and social consequences of the crisis. Our findings highlight the importance of financial incentives and reputational concerns in motivating financial professionals to address the climate crisis

High levels of air pollution reduce team performance

Teams play a key role in tackling complex societal challenges, such as developing vaccines or novel clean energy technologies. Yet, the effect of air pollution on team performance in non-routine problem-solving tasks is not well explored. Here, we document a sizable adverse effect of air pollution on team performance using data from 15,000 live escape games in London, United Kingdom. On high-pollution days, teams take on average 5% more time to solve a sequence of non-routine analytical tasks, which require collaborative skills analogous to those needed in the modern workplace. Negative effects are non-linear and only occur at high levels of air pollution, which are however commonplace in many developing countries. As team efforts predominantly drive innovation, high levels of air pollution may significantly hamper economic development

Chilling results: how explicit warm glow appeals fail to boost pro-environmental behaviour

We conducted a large-scale online experiment to examine whether climate change messaging can induce emotions and motivate pro-environmental action. We study how exposure to explicit positive (‘warm glow’) and negative (‘cold prickle’) emotional appeals as well as a traditional social norm communication affects pro-environmental action. We find that a simple call to take action to mitigate climate change is at least as affective as social norm message framing and emotional appeals. Our results highlight the difficulty of designing messaging interventions that effectively harness emotional incentives to promote pro-environmental action. Messages that explicitly emphasise the personal emotional benefits of contributing to environmental causes or the adverse emotional effects of not doing so seem to fall short of motivating pro-environmental effort. Our findings underscore the need for caution when incorporating emotive appeals into policy interventions

Energiekrise – was tun? Verhaltenswissenschaftliche Empfehlungen

Die aktuelle Energiekrise verlangt nach einer Änderung unseres täglichen Verhaltens, als Individuen und als Gesellschaft. Erkenntnisse aus der verhaltenswissenschaftlichen Forschung liefern Hinweise, wie Haushalte, öffentliche Institutionen und Unternehmen beim Senken des Energieverbrauchs und der Nutzung erneuerbarer Energiequellen unterstützt werden können. In diesem Policy Brief werden diese Erkenntnisse entlang von drei zentralen Punkten vorgestellt. Zunächst wird diskutiert, wie durch gezielten Aufbau von Kompetenz Einzelner eine Verhaltensänderung erreicht werden kann. Danach wird dargestellt, wie durch Eingriffe in situative Gegebenheiten Energiesparen bzw. der Ausbau von nachhaltiger Energie einfacher gemacht werden kann. Besonders relevant ist auch die Motivation: Klassische Motivatoren wie Gesetze oder finanzielle Anreize können auf Basis neuer Forschungsergebnisse optimiert, und verhaltenswissenschaftliche Motivatoren wie konkrete Zielsetzungen, Kosten-Nutzen-Wahrnehmung, sozialer Einfluss und Identität können gezielt eingesetzt werden. Bei allen Vorschlägen gilt: Voraussetzung für erfolgreiche Maßnahmen sind breite Akzeptanz und Vertrauen, die durch transparente und wertschätzende Diskussion zwischen verschiedenen Interessensgruppen gefördert werden können

Evaluating the impacts of a large-scale voluntary REDD+ project in Sierra Leone

Carbon offsets from the REDD+ (reducing emissions from deforestation and degradation) framework to protect forests are expected to see a 100-fold increase in market value by 2050. However, independent causal impact evaluations are scarce and only a few studies assess benefits to communities themselves, a core objective of REDD+. Following a pre-analysis plan, we use a before-after-control-intervention (BACI) framework to evaluate the impact of a large-scale voluntary REDD+ project in Sierra Leone—the Gola project. We use a panel of both satellite images and household surveys to provide causal evidence of the impact of the project on local deforestation rates and socioeconomic indicators over the first 5 yr of its implementation. We find that REDD+ slowed deforestation by 30% relative to control communities while not changing economic wellbeing and conservation attitudes. We find suggestive evidence that the programme increased the value of alternative income sources, by shifting labour away from forest-dependent farming activities. A cost-to-carbon calculation shows that REDD+ led to 340,000 tCO2 in avoided emissions per year, with an estimated cost of US$1.12 per averted tCO2. Our study contributes to developing an evidence base for voluntary REDD+ projects and offers a robust approach to carry out BACI assessments

A dual-track transition to global carbon pricing

Unilateral climate policies have been unable to achieve intended emissions reductions. We argue that international harmonization of climate policy beyond the Paris Agreement is the only way forward and that global carbon pricing, either through a tax or market, is the best available instrument to manage this. A foundation has already been laid, as current carbon pricing initiatives cover about 20% of global CO2 emissions. Since it limits free-riding by countries/jurisdictions, global carbon pricing is, in principle, behaviourally easier to negotiate than other instruments, such as emission targets or technical standards

Parallel tracks towards a global treaty on carbon pricing

We argue that a global carbon price is the only way to effectively tackle free riding in international climate policy, required to substantially reduce greenhouse gas emissions. We briefly review the main reasons behind the essential role of carbon pricing, address common misunderstandings and scepticism, and identify key complementary policy instruments. Negotiating global carbon pricing is argued to be much easier than negotiating binding country-level targets, especially if it includes equitable revenue recycling. Moreover, a global carbon price can be more readily adapted to new data and insights of climate science. We propose a political strategy towards a global carbon price that consists of two tracks. The first entails assembly of a carbon-pricing club, a specific case of a climate club, to gradually move towards a full participatory agreement on carbon pricing. The second track involves putting time and energy into re-focusing UNFCCC negotiations on a carbon-pricing agreement. The two tracks reinforce one another, increasing the likelihood of a successful outcome

A dual-track transition to global carbon pricing: the glass is half full

We appreciate the response by Erik Haites (2020) to our paper (van den Bergh et al., 2020a), not only because it is well-informed and contains many subtle remarks, but also because our article was aimed at stimulating debate on how to achieve effective climate policies that limit global warming change to 1.5-2°C. There is no question that the latter represents a tremendous challenge for the global community, and our dual-track proposal is intended to provide a workable approach to it by addressing the free-riding problem through policy harmonization. Although we feel that Haites raises many relevant points regarding the difficulties of carrying out the proposal, most of these were, in fact, already addressed by our paper (...

Behavioral economics and environmental policy: Theory and experiments

La eficacia, la equidad y la eficiencia de las políticas ambientales orientadas a la sostenibilidad dependen en gran medida del modelo subyacente de comportamiento individual. Sólo un modelo fundado empíricamente en la acción y motivación individuales puede garantizar el diseño de políticas y acuerdos ambientales efectivos. La teoría dominante en política medioambiental se basa en el modelo económico estándar racional (neoclásico), de comportamiento egoísta y preferencias estables. Esto tiende a favorecer a los instrumentos políticos que tratan de influir en el comportamiento a través de señales de precios. Más recientemente, la economía conductual ha generado evidencia experimental considerable de que el comportamiento individual se desvía de la plena racionalidad y el puro interés propio. Esta Tesis tiene en cuenta la racionalidad limitada y las interacciones sociales para identificar instrumentos de política ambiental adecuados. Contiene cinco ensayos que investigan las aplicaciones de modelos alternativos de comportamiento para mejorar o modificar ideas dentro de la economía ambiental y la teoría de la política pública. La Tesis combina modelos teóricoanalíticos e investigación económica experimental para estudiar las preferencias individuales y fundamentar el diseño de políticas. El primer ensayo ofrece una extensa revisión crítica de la economía conductual y su aplicación al comportamiento de relevancia medioambiental, y concluye que asumir la existencia de anomalías sistemáticas en las decisiones y preferencias sociales proporciona un punto de partida para una política ambiental eficaz. El segundo ensayo presenta un análisis teórico-formal del papel de la publicidad en el consumo impulsado por cuestiones de estatus y normas sociales, con graves impactos ambientales. Esto se refleja mediante la formulación de un modelo económico-comportamental con una función de utilidad que formaliza la idea de Veblen del consumo conspicuo. Por lo tanto, el modelo combina externalidades ambientales y de consumo, y muestra qué paquete particular de políticas es necesario para restaurar el bienestar social óptimo. El tercer ensayo investiga motivos no pecuniarios importantes para el comportamiento sostenible que los modelos estándar desatienden. Se llevaron a cabo experimentos de campo, cuyos resultados evidencian la relevancia de los motivos sociales en el comportamiento sostenible. El cuarto ensayo explora el impacto de la racionalidad limitada y de las preferencias sociales en las percepciones de los grupos de interés (stakeholders) acerca de las pérdidas y ganancias y de las dinámicas de negociación que se dan en las negociaciones internacionales sobre cambio climático. Ideas principales de la economía conductual son sistemáticamente aplicadas para explicar y predecir cómo los distintos tipos de actores (ciudadanos, expertos, negociadores, políticos, grupos de interés) actuarán en las negociaciones climáticas. El quinto ensayo utiliza un experimento de laboratorio para evaluar las preferencias o contribuciones en la reducción de emisiones bajo diferentes escenarios ─ gradual y abrupto ─ de desastres naturales debidos al cambio climático. En conclusión, la presente Tesis muestra que la economía conductual y experimental proporcionan una base muy sólida para el estudio de comportamientos individuales ambientalmente relevantes y la toma de decisiones públicas, con el objetivo de diseñar una política y acuerdos ambientales más efectivos.The effectiveness, equity and efficiency of environmental policies depend very much on the underlying model of individual behavior. Only an empirically founded model of individual action and motivation can guarantee the design of adequate environmental policies and environmental agreements. The dominant theory of environmental policy is based on the standard (neoclassical) economic model of rational, self-interested behavior and stable preferences. This tends to favor policy instruments that attempt to influence behavior through price signals. More recently, behavioral economics has generated considerable experimental evidence that individual behavior deviates from full rationality and pure self-interest. This thesis attempts to take into account bounded rationality and social interactions to identify suitable environmental policy instruments. It contains five essays that investigate applications of alternative models of behavior to refine or alter insights within environmental economics and public policy theory. The thesis combines theoretical-analytical modeling and experimental economic research to study individual preferences and inform policy design. The first essay offers an extensive and critical review of behavioral economics and its application to environmentally relevant behavior and concludes that assuming systematic decision anomalies and social preferences provides an improved starting point for effective environmental policy. The second essay presents a formal-theoretical analysis of the role of advertising in status- and norm-driven consumption with serious environmental impacts. This is captured by formulating a behavioral-economic model with a utility function that formalizes Veblen’s idea of conspicuous consumption. The model combines therefore environmental and consumption externalities and shows which particular policy package is needed to restore optimal social welfare. The third essay investigates important non-pecuniary motives for sustainability behavior that standard models neglect. Framed field experiments of recycling are carried out, the results of which provide evidence for the relevance of social motives for sustainable behavior. The fourth essay explores the impact of bounded rationality and social preferences on stakeholder perceptions of gains and losses and bargaining dynamics in international climate negotiations. Main insights of behavioral economics are systematically applied to explain and predict how various types of stakeholders (citizens, experts, negotiators, politicians, interest groups) will act in climate negotiations. The fifth essay uses a laboratory experiment to assess preferences for, or contributions to, emissions reduction under different – gradual and abrupt – scenarios of natural disasters due to climate change. In conclusion, the present thesis shows that behavioral and experimental economics provide a powerful framework to study individual environmentally-relevant behavior and public decision-making. In addition, various new insights are generated about the preparation and design of environmental agreements and policy