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Psychology and Behavioral Economics Lessons for the Design of a Green Growth Strategy

50 Pages Posted: 20 Apr 2016  

Elke U. Weber

Columbia Business School - Management & Psychology

Eric J. Johnson

Columbia Business School - Marketing

Date Written: October 1, 2012

Abstract

A green growth agenda requires policy makers, from local to supranational levels, to examine and influence behavior that impacts economic, social, and environmental outcomes on multiple scales. Behavioral and social change, in addition or conjunction with technological change, is thus a crucial component of any green growth strategy. A better understanding of how and why people consume, preserve, or exploit resources or otherwise make choices that collectively impact the environment has important and far-reaching consequences for the predictive accuracy of more sophisticated models, both of future states of the world and of the likely impact of different growth strategies and potential risk management strategies. The prevailing characterization of human decision making in policy circles is a rational economic one. Reliance on the assumptions of rational choice excludes from consideration a wide range of factors that affect how people make decisions and therefore need to be considered in predictions of human reactions to environmental conditions or proposed policy initiatives. In addition, a more complete and more fully descriptive understanding of decision processes provide powerful tools for policy design that complement legal or economic instruments or may lead to more effective implementation of such policy instruments.

Keywords: Environmental Economics & Policies, Economic Theory & Research, Knowledge for Development, Climate Change Economics, Climate Change Mitigation and Green House Gases

Suggested Citation

Weber, Elke U. and Johnson, Eric J., Psychology and Behavioral Economics Lessons for the Design of a Green Growth Strategy (October 1, 2012). World Bank Policy Research Working Paper No. 6240. Available at SSRN: https://ssrn.com/abstract=2165678

Elke U. Weber (Contact Author)

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

Eric J. Johnson

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

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