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Behavioral Economics, Consumption, and Environmental Protection

Forthcoming in Handbook on Research in Sustainable Consumption (Lucia Reisch & John Thøgersen eds.)

29 Pages Posted: 21 Jul 2013  

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Date Written: July 19, 2013

Abstract

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.

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

Suggested Citation

Sunstein, Cass R., Behavioral Economics, Consumption, and Environmental Protection (July 19, 2013). Forthcoming in Handbook on Research in Sustainable Consumption (Lucia Reisch & John Thøgersen eds.). Available at SSRN: https://ssrn.com/abstract=2296015 or http://dx.doi.org/10.2139/ssrn.2296015

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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