Climate-Friendly Default Rules
31 Pages Posted: 18 Jun 2016 Last revised: 26 Feb 2017
Date Written: August 9, 2016
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
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