New Perspectives For Environmental Policies Through Behavioral Economics

This book presents essential insights on environmental policy derived from behavioral economics. The authors demonstrate the potential of behavioral economics to drive environmental protection and to generate concrete proposals for the efficient design of policy instruments. Moreover, detailed recommendations on how to use “nudges” and related instruments to move industry and society toward a sustainable course are presented. This book addresses the needs of environmental economists, behavioral economists and environmental policymakers, as well as all readers interested in the intersection between behavioral economics and environmental policy.

This book is about bounded rationality and public policy. It is written from the p- spective of someone trained in public economics who has encountered the enormous literature on experiments in decision-making and wonders what implications it has for the normative aspects of public policy. Though there are a few new results or models, to a large degree the book is synthetic in tone, bringing together disparate literatures and seeking some accommodation between them. It has had a long genesis. It began with a draft of a few chapters in 2000, but has expanded in scope and size as the literature on behavioural economics has grown. At some point I realised that the geometric growth of behavioural - search and the arithmetic growth of my writing were inconsistent with an am- tion to be exhaustive. As such therefore I have concentrated on particular areas of behavioural economics and bounded rationality. The resulting book is laid out as follows: Chapter 1 provides an overview of the rest of the book, goes through some basic de?nitions and identi?es themes.

Humans have long neglected to fully consider the impact of their behaviour on the environment. From excessive consumption of fossil fuels and natural resources to pollution, waste disposal, and, in more recent years, climate change, most people and institutions lack a clear understanding of the environmental consequences of their actions. The new field of behavioural environmental economics seeks to address this by applying the framework of behavioural economics to environmental issues, thereby rationalizing unexplained puzzles and providing a more realistic account of individual behaviour. This book provides a complete and rigorous overview of environmental topics that may be addressed and, in many instances, better understood by integrating a behavioural approach. This volume features state-of-the-art research on this topic by influential scholars in behavioural and environmental economics, focussing on the effects of psychological, social and cognitive factors on the decision-making process. It presents research performed using different methods and data collection mechanisms (e.g. laboratory experiments, field experiments, natural experiments, online surveys) on a variety of environmental topics (e.g. sustainability, natural resources). This book is a comprehensive and innovative tool for researchers and students interested in the behavioural economics of the environment and in the design of policy interventions aimed at reducing the human impact on the environment.

The purpose of this collection of essays is to shed some light on the complex relationship between environmental quality and the distribution of income. Are the preferences of the poor towards a cleaner environment really different from those of the rich? Environmental economists have traditionally focused on efficiency issues. In their analyses the quality of the environment is usually related to aggregate or average variables, like per capita income; policy recommendations are usually formulated considering efficiency with no regard for equity and also the predicted effects of policies are evaluated in aggregate terms. The essays collected in this volume go into the problem of the relationship between environmental quality and income distribution. The book’s opening essay shows how different theories of economic growth and environmental quality seem to suggest that the higher the level of income the higher is the value of environmental protection. The essays that follow, a mix of already published papers and of papers solicited for this book, analyse the relationship between environmental quality and income distribution from different perspectives (both micro and macro) and on the basis of more than one methodology. This book highlights that the preferences of the poor towards a cleaner environment may differ from those of the rich, but income is also very likely to represent only one factor affecting them. The essays consider other relevant factors affecting preferences for environmental quality. What clearly emerges is that the distribution of costs and benefits of environmental policies is the key for their successful implementation, and that further research is needed to both address the distributional effects themselves and the strategies to mitigate them.

Most people would agree that it makes sense to tax a company that pollutes in a way that directly reflects the amount of environmental and social damage it has done. Yet in practice, such taxes are fraught with difficulty and have far-reaching implications. A company facing a new tax may lay off workers, for example, exacerbating an unemployment problem. This volume focuses on such external issues and examines in detail the trade-offs involved in designing policies to deal with environmental problems. Reflecting the broad nature of the subject, the contributors include leading economists in the areas of public finance, industrial organization, and trade theory, as well as environmental economists. Integrating both theoretical and empirical methods, they examine environmental policy design as it relates to location decisions, compliance costs, administrative costs, effects on research and development, and international factor movements. Shedding light on an extraordinarily complex and important topic, this collection will be of interest to all those involved in designing effective environmental policy.

This comprehensive Handbook addresses a wide variety of methodological approaches adopted and developed by behavioural economists, exploring the implications of such innovations for analysis and policy.

Behavioural economics and behavioural finance are rapidly expanding fields that are continually growing in prominence. While orthodox economic models are built upon restrictive and simplifying assumptions about rational choice and efficient markets, behavioural economics offers a robust alternative using insights and evidence that rest more easily with our understanding of how real people think, choose and decide. This insightful textbook introduces the key concepts from this rich, interdisciplinary approach to real-world decision-making. This new edition of Behavioural Economics and Finance is a thorough extension of the first edition, including updates to the key chapters on prospect theory; heuristics and bias; time and planning; sociality and identity; bad habits; personality, moods and emotions; behavioural macroeconomics; and well-being and happiness. It also includes a number of new chapters dedicated to the themes of incentives and motivations, behavioural public policy and emotional trading. Using pedagogical features such as chapter summaries and revision questions to enhance reader engagement, this text successfully blends economic theories with cutting-edge multidisciplinary insights. This second edition will be indispensable to anyone interested in how behavioural economics and finance can inform our understanding of consumers’ and businesses’ decisions and choices. It will appeal especially to undergraduate and graduate students but also to academic researchers, public policy-makers and anyone interested in deepening their understanding of how economics, psychology and sociology interact in driving our everyday decision-making.

As an experiment in reconnecting academia to the broader democracy, this work is designed to invigorate public policy debate by rededicating academic work to the pursuit of solutions to society's great problems.