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Automatically Green: Behavioral Economics and Environmental Protection

Cass R. Sunstein

Harvard Law School

Lucia Reisch

Copenhagen Business School - Department of Intercultural Communication and Management

September 19, 2013

Forthcoming, Harvard Environmental Law Review

Careful attention to choice architecture promises to open up new possibilities for environmental protection – possibilities that go well beyond, and that may be more effective than, the standard tools of economic incentives, mandates, and bans. How, for example, do consumers choose between environmentally-friendly products or services and alternatives that are potentially damaging to the environment but less expensive? The answer may well depend on the default rule. Indeed, green default rules may well be a more effective tool for altering outcomes than large economic incentives. The underlying reasons include the power of suggestion; inertia and procrastination; and loss aversion. If well-chosen, green defaults are likely to have large effects in reducing the economic and environmental harms associated with various products and activities. Such defaults may or may not be more expensive to consumers. In deciding whether to establish green defaults, choice architects should consider both consumer welfare and a wide range of other costs and benefits. Sometimes that assessment will argue strongly in favor of green defaults, particularly when both economic and environmental considerations point in their direction. But when choice architects lack relevant information, when interest-group maneuvering is a potential problem, and when externalities are not likely to be significant, active choosing, perhaps accompanied by various influences (including provision of relevant information), will usually be preferable to a green default.

Number of Pages in PDF File: 27

Keywords: Behavioral economics, default rules, social norms, active choosing, green energy

JEL Classification: D03, D91, K32, Q20, Q40, Q50, Q58

Accepted Paper Series

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Date posted: April 7, 2013 ; Last revised: September 23, 2013

Suggested Citation

Sunstein, Cass R. and Reisch, Lucia, Automatically Green: Behavioral Economics and Environmental Protection (September 19, 2013). Forthcoming, Harvard Environmental Law Review. Available at SSRN: http://ssrn.com/abstract=2245657 or http://dx.doi.org/10.2139/ssrn.2245657

Contact Information

Cass R. Sunstein (Contact Author)
Harvard Law School ( email )
1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)
Lucia Reisch
Copenhagen Business School - Department of Intercultural Communication and Management ( email )
Solbjerg Plads 3
Frederiksberg C, DK - 2000
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