Aiding Decision-Making to Reduce the Impacts of Climate Change

27 Pages Posted: 10 Jan 2014

See all articles by Howard Kunreuther

Howard Kunreuther

University of Pennsylvania - Operations, Information and Decisions Department; National Bureau of Economic Research (NBER)

Elke U. Weber

Columbia Business School - Management & Psychology

Multiple version iconThere are 2 versions of this paper

Date Written: January 2014

Abstract

Utilizing theory and empirical insights from psychology and behavioral economics, this paper examines individuals' cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits and behavioral biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures.

Suggested Citation

Kunreuther, Howard C. and Weber, Elke U., Aiding Decision-Making to Reduce the Impacts of Climate Change (January 2014). NBER Working Paper No. w19776. Available at SSRN: https://ssrn.com/abstract=2377130

Howard C. Kunreuther (Contact Author)

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
558 & 559 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States
212-854-0423 (Phone)
215-573-2130 (Fax)

National Bureau of Economic Research (NBER)

Elke U. Weber

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
11
Abstract Views
281
PlumX Metrics