Prospect theory, mitigation and adaptation to climate change

Climate change is one of the most pressing challenges in current environmental policy. Appropriate policies intended to stimulate efficient adaptation and mitigation should not exclusively rely on the assumption of the homo oeconomicus, but take advantage of well-researched alternative behavioural patterns. Prospect theory provides a number of climate-relevant insights, such as the notion that evaluations of outcomes are reference dependent, and the relevance of perceived certainty of outcomes. This paper systematically reviews what prospect theory can offer to analyse mitigation and adaptation. It is shown that accounting for reference dependence and certainty effects contributes to a better understanding of some well-known puzzles in the climate debate, including (but not limited to) the different uptake of mitigation and adaptation amongst individuals and nations, the role of technical vs. financial adaptation, and the apparent preference for hard protection measures in coastal adaptation. Finally, concrete possibilities for empirical research on these effects are proposed

Losing the rose tinted glasses: Neural substrates of unbiased belief updating in depression.

Recent evidence suggests that a state of good mental health is associated with biased processing of information that supports a positively skewed view of the future. Depression, on the other hand, is associated with unbiased processing of such information. Here, we use brain imaging in conjunction with a belief update task administered to clinically depressed patients and healthy controls to characterize brain activity that supports unbiased belief updating in clinically depressed individuals. Our results reveal that unbiased belief updating in depression is mediated by strong neural coding of estimation errors in response to both good news (in left inferior frontal gyrus and bilateral superior frontal gyrus) and bad news (in right inferior parietal lobule and right inferior frontal gyrus) regarding the future. In contrast, intact mental health was linked to a relatively attenuated neural coding of bad news about the future. These findings identify a neural substrate mediating the breakdown of biased updating in major depression disorder, which may be essential for mental health

From Harm to Robustness: A Principled Approach to Vice Regulation

John Stuart Mill’s harm principle maintains that adult behavior cannot justifiably be subject to social coercion unless the behavior involves harm or a significant risk of harm to non-consenting others. The absence of harms to others, however, is one of the distinguishing features of many manifestations of “vices” such as the consumption of alcohol, nicotine, recreational drugs, prostitution, pornography, and gambling. It is with respect to vice policy, then, that the harm principle tends to be most constraining, and some current vice controls, such as prohibitions on drug possession and prostitution, violate Mill’s precept. In the vice arena, we seem to be willing to accept social interference with what Mill termed “self-regarding” behavior. But does that willingness then imply that any social intervention into private affairs is justifiable, that the government has just as much right to outlaw Protestantism, or shag carpets, or spicy foods, as it does to outlaw drugs? In this paper I argue that advances in neuroscience and behavioral economics offer strong evidence that vices and other potentially addictive goods or activities frequently involve less-than-rational choices, and hence are exempt from the full force of the harm principle. As an alternative guide to vice policy, and following some guidance from Mill, I propose the “robustness principle”: public policy towards addictive or vicious activities engaged in by adults should be robust with respect to departures from full rationality. That is, policies should work pretty well if everyone is completely rational, and policies should work pretty well even if many people are occasionally (or frequently) irrational in their vice-related choices. The harm and robustness principles cohere in many ways, but the robustness principle offers more scope for policies that try to direct people “for their own good,” without opening the door to tyrannical inroads upon self-regarding behavior