Aiding Decision-Making to Reduce the Impacts of Climate Change

27 Pages Posted: 10 Jan 2014 Last revised: 14 Jan 2024

See all articles by Howard Kunreuther

Howard Kunreuther

National Bureau of Economic Research (NBER); University of Pennsylvania - Wharton Risk Management and Decision Processes Center

Elke U. Weber

Princeton University - Department of 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 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)

National Bureau of Economic Research (NBER)

University of Pennsylvania - Wharton Risk Management and Decision Processes Center ( email )

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Elke U. Weber

Princeton University - Department of Psychology

Green Hall
Princeton, NJ 08540
United States

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