Behavioral Economics, Consumption, and Environmental Protection
Cass R. Sunstein
Harvard Law School
July 19, 2013
Forthcoming in Handbook on Research in Sustainable Consumption (Lucia Reisch & John Thøgersen eds.)
Behavioral economists have shown that consumers may disregard the long-term, display unrealistic optimism, ignore shrouded attributes, procrastinate, make mistaken judgments about probability, and suffer from “internalities,” which occur when people make decisions that hurt their future selves. Moreover, choice architecture, understood as the social background, is always present, and it can have major consequences for both consumption decisions and environmental outcomes. Small changes in the underlying architecture may have a large impact on consumer behavior, potentially even larger than that of significant economic incentives. Such changes may involve disclosure, warnings, default rules, increased salience, and use of social norms. In the domain of environmental protection, non-price interventions, preserving freedom of choice, have considerable potential.
Number of Pages in PDF File: 29
Keywords: behavioral economics, social norms, non-price interventions, consumer behavior, energy paradox, bounded rationality, environmental protection, default rules
JEL Classification: D03, D91, KO, K32, Q50, Q58
Date posted: July 21, 2013
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