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Climate-Friendly Default Rules

31 Pages Posted: 18 Jun 2016 Last revised: 26 Feb 2017

Cass R. Sunstein

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

Lucia A. Reisch

Copenhagen Business School - Department of Management, Society and Communication; Zeppelin University CCMP - Center for Consumers Markets Politics

Date Written: August 9, 2016

Abstract

Careful attention to choice architecture promises to open up new possibilities for reducing greenhouse gas emissions – possibilities that go well beyond, and that may supplement or complement, the standard tools of economic incentives, mandates, and bans. How, for example, do consumers choose between climate-friendly products or services and alternatives that are potentially damaging to the climate but less expensive? The answer may well depend on the default rule. Indeed, climate-friendly default rules may well be a more effective tool for altering outcomes than large economic incentives. The underlying reasons include the power of suggestion; inertia and procrastination; and loss aversion. If well-chosen, climate-friendly defaults are likely to have large effects in reducing the economic and environmental harms associated with various products and activities. In deciding whether to establish climate-friendly defaults, choice architects (subject to legal constraints) should consider both consumer welfare and a wide range of other costs and benefits. Sometimes that assessment will argue strongly in favor of climate-friendly defaults, particularly when both economic and environmental considerations point in their direction. Notably, surveys in the United States and Europe show that majorities in many nations are in favor of climate-friendly defaults.

Keywords: climate change, default rules, nudge, choice architecture

Suggested Citation

Sunstein, Cass R. and Reisch, Lucia A., Climate-Friendly Default Rules (August 9, 2016). Available at SSRN: https://ssrn.com/abstract=2796786 or http://dx.doi.org/10.2139/ssrn.2796786

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

Lucia A. Reisch

Copenhagen Business School - Department of Management, Society and Communication ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Zeppelin University CCMP - Center for Consumers Markets Politics ( email )

Am Seemooser Horn 20
Friedrichshafen, Lake Constance 88045
Germany

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