Behavioral Instruments in Environmental Regulation

Abstract

This chapter briefly describes the use and usefulness of behavioral and psychological instruments in environmental regulation. Behavioral instruments — tools for regulating behavior that build on empirical research about how people actually behave — can contribute to environmental law in at least two ways. First, behavioral research can be used descriptively to understand and to interrogate the behaviors that generate environmental impacts. This is useful because it can help flag where environmental law is most likely to run aground on behavioral phenomena, and because it can highlight areas where legal interventions may be most and least effective. Second, behavioral research is useful prescriptively for helping to identify effective mechanisms for shaping behavior towards preferred ends. The chapter gives an overview of three key findings in law and behavior (dual-process cognition, loss aversion, and time inconsistency), and describes two key instruments (default rules and framing) that build on the insights of behavioral research, and which can be used to shape people’s behavior towards environmental ends.

Keywords: psychology, behavior, heuristic, bias, cognitive, rationality, empirical, nudges, default rules, framing, prospect theory, loss aversion, irrational

JEL Classification: K1, K32, K42, K49