When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner

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When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner

By Marc Gunther, ClimateBiz.com

But what if the choices were reversed? Organizers of the 2009 Behavior, Energy and Climate Change Conference, which began Monday in Washington, tried an experiment: They made a vegetarian lunch the default option, and gave meat eaters the choice of opting out.

At the Net Impact conference last week, a waiter stopped by before lunch to ask if anyone at our table wanted a vegetarian meal instead of chicken. Just one or two people did.

This, as it happens, is typical. When a meat-based entrée is being served, and people are offered a vegetarian alternative, about 5 to 10 percent will request it.

But what if the choices were reversed? Organizers of the 2009 Behavior, Energy and Climate Change Conference, which began Monday in Washington, tried an experiment: They made a vegetarian lunch the default option, and gave meat eaters the choice of opting out.

Some 80 percent went for the veggies, not because there were lots of vegetarians in the crowd of about 700 people but because the choice was framed differently. We know that because, at a prior BECC conference, when meat was the default option, attendees chose the meat by an 83 percent to 17 percent margin.

More than lunch is at stake here. “Omnivores contribute seven times the greenhouse gas emissions, when compared to vegans,” says Karen Ehrhardt-Martinez, the conference chair, who works for the American Council for an Energy Efficient Economy.

Might there be broad-based ways to promote a vegetarian diet, while giving people the freedom to choose what they want? How can smart-grid technology be designed to encourage people to conserve energy? Which green marketing messages work, and which don’t? Can the insights of behavioral economics help fight climate change?

Those are the questions that engaged the policy makers, academics, and business executives at this BECC event, which differs from most conversations about climate change. Typically, when politicians, environmentalists or corporate executives discuss the issue, they focus on technology (solar, wind, electric cars) or regulation (cap-and-trade, the UN climate talks). The BECC crowd focuses on another powerful lever, albeit one that doesn’t get as much attention: human behavior, and in particular the irrational, emotional, self-defeating, short-term, inconsiderate and plain old silly human behavior that most of us engage in every day.

Like keeping incandescent light bulbs burning, when we know CFLs are cheaper (and most work very well). Or looking at the price tag of an appliance, rather than its lifecycle costs. Or buying things -- like over-sized homes -- that we can’t afford.

As Erhardt-Martinez notes, personal choices have a huge collective impact on the climate crisis. Home energy use and the use of personal vehicles -- that is, the way we live -- accounts for about 38 percent of U.S. energy consumption. Behavior change could generate energy savings of 25 to 30 percent over the next five to eight years, she said.

There’s no need to wait for technology breakthroughs. “We already have much better choices,” she said. “People aren’t making them.”

Dan Ariely, professor of behaviorial economics at Duke and director of the Center for Advanced Hindsight (!) -- gave the opening keynote at BECC, and he left no doubt that most of us are not nearly as rational in our decision-making as we would like to think we are. (I blogged in June about Ariely’s entertaining book, Predictably Irrational: The Hidden Forces that Shape Our Decisions. If this topic interests you, I can also enthusiastically recommend Nudge: Improving Decisions about Health, Wealth and Happiness by Richard Thaler and Cass Sunstein. Sunstein has since joined the Obama administration as a shaper of regulations.) Ariely, Sunstein, Thaler and others have all brought the insights of psychology to the study of economics, helping explain how we humans actually behave. Hint: we’re not always the dispassionate, rational, self-interested, utility-maximizers of Econ 101.

“We wake up every morning with an incredible sense of agency,” Ariely says, meaning that we see ourselves as masters of our own fate. But evidence suggests that emotion, not to mention the people who design user interfaces -- from the lunch menu to the choices presented by our 401-K plans -- play a large role in our lives.

The climate crisis is a particular challenge for behavioral economists. It’s a long-term problem, and we tend to focus on the immediate. (That’s why Americans can’t resist dessert, and had a negative savings rate for many years.) Greenhouse gases are invisible, unlike other pollutants. Measuring the impact of individual actions is all but impossible. Global warming will harm other people, mostly poor people in the global south, before it damages the U.S.

“If you said, I want to create a problem that people don’t care about, you would probably come up with global warming,” Ariely says.

Still, there’s creative work being done to change behavior. Check out the Energy Smackdown, a community-based competition to excite people about saving energy. Some utility companies put smiley faces on bills of efficient consumers, promoting friendly neighborhood rivalries. Speakers at the conference addressed such topics as “Consumption-Based Carbon Footprint Accounting Tools,” “Pay as You Drive Insurance” and “Framing Matters: The Impact of Policy Context on Willingness to Change Energy Consumption Behavior.”

Call me a geek, but I’d like to know more. Unfortunately, I couldn’t attend most of the conference. So if you presented, or want to offer insights on how behaviorial economics can mitigate climate change, feel free to comment below, send me an email or propose a guest blogpost on the topic.