Degradation of organic soils leads to substantial greenhouse gas emissions. Preservation of these soils is in conflict with their current intensive use, as preservation would require restricting ...drainage. Due to spatial interdependencies of organic soil areas, rewetting these soils requires cooperation among farmers. Agglomeration payments are a potential option to foster such cooperation. In order to test the effectiveness of this policy approach, we developed a dynamic and framed economic experiment to represent the decision situation of farmers operating on organic soils in Switzerland. Our sample population are farm apprentices. Unlike previous experiments on agglomeration payments, our design allows for heterogeneity and dynamic changes in farmers’ opportunity costs and for side payments between players. We compared the effects of constant vs. variable agglomeration payment schemes on the adoption of sustainable use of organic soils. The variable payment mirrors the evolution of farmers’ opportunity costs over time. We find that while both policy options promote sustainable land use, the constant payment option performs best in terms of environmental effectiveness. The constant payment also yields lower inequality in income and is more cost-effective than the variable option. Furthermore, risk aversion and inequality aversion appear to influence behavior and reduce cooperation among players.
Abstract To address the climate crisis, it is necessary to transform the economy, with the finance industry taking a central role by implementing sustainable investment policies. This study aims to ...understand the motivations and preferences of its key players—financial professionals and climate experts. Here we use an incentivized experiment to measure the willingness to forgo payout to curb carbon emissions and a survey to elicit attitudes and beliefs toward the climate crisis. We provide suggestive evidence that financial professionals have a lower willingness to curb carbon emissions, are less concerned about climate change, and are less supportive of carbon taxes compared to climate experts. We report differences in motivations and priorities, with financial professionals emphasizing economic and reputational considerations and climate experts prioritizing ecological and social consequences of the crisis. Our findings highlight the importance of financial incentives and reputational concerns in motivating financial professionals to address the climate crisis. Pre-registration: The study was pre-registered on 14 April 2021. The pre-registration is available on OSF at https://osf.io/7q5du/ .
Established environmental policy theory is based on the assumption of homo economicus. This means that people are seen as fully rational and acting in a self-regarding manner. In line with this, ...economics emphasizes efficient policy solutions and the associated advantages of price incentives. Behavioral economics offers alternative, more realistic views on individual behavior. In this paper we investigate opportunities to integrate bounded rationality and other-regarding preferences into environmental policy theory to arrive at recommendations for more effective policies. For this purpose, we will address decisions made under risk and uncertainty, intertemporal choice, decision heuristics, other-regarding preferences, heterogeneity, evolutionary selection of behaviors, and the role of happiness. Three aspects of environmental policy are considered in detail, namely sustainable consumption, environmental valuation and policy design. We pay special attention to the role of non-pecuniary, informative instruments and illustrate the implications for climate policy.
A theoretical model is developed to analyse optimal environmental policy when consumer preferences are endogenous. It captures that pollutive consumption is sensitive to consumption by others and ...commercial advertising. This is conceptualized through a consumption norm. An increase in this norm means that consumers will become dissatisfied with a given consumption level and try to raise it, which will cause an increase in pollution. The model is particularly relevant for the study of conspicuous consumption which generally is subject to concentrated advertising efforts while it generates considerable pollution. The model can accommodate the cases of an externality created by advertising being positive or negative. We also show that using different functional specifications for the norm function one can address either conformity or status seeking. We derive optimal rules for a pollution tax, a subsidy or tax on advertising, and information provision by the government. The results not only contribute to more realism in environmental policy theory but also extend public policy with new instruments.
•We model consumer behaviour accounting for social interaction, advertising and pollution.•Advertising magnifies negative externalities by stimulating pollutive consumption.•Optimal rules for regulation of environmental and advertising externalities are derived.•The social welfare analysis shows that advertising can attain a socially excessive level.•An optimal policy package includes an adapted Pigouvian and an advertising tax.
Teams play a key role in tackling complex societal challenges, such as developing vaccines or novel clean energy technologies. Yet, the effect of air pollution on team performance in non-routine ...problem-solving tasks is not well explored. Here, we document a sizable adverse effect of air pollution on team performance using data from 15,000 live escape games in London, United Kingdom. On high-pollution days, teams take on average 5% more time to solve a sequence of non-routine analytical tasks, which require collaborative skills analogous to those needed in the modern workplace. Negative effects are non-linear and only occur at high levels of air pollution, which are however commonplace in many developing countries. As team efforts predominantly drive innovation, high levels of air pollution may significantly hamper economic development.
Studies on the design of agri-environmental payments have proposed agglomeration payments to address cases where coordination is required to achieve sustainable outcomes, and differentiated instead ...of uniform payments to address cost heterogeneity of land users. In this paper, we combine the two. We develop an economic experiment to test the environmental effectiveness, cost-effectiveness, and equity effect of differently designed agglomeration payments in the context of the sustainable use of peatlands in Switzerland. We find no difference between the environmental effectiveness of differentiated and uniform agglomeration payments. In terms of cost-effectiveness, differentiated payments perform best. However, income inequality is higher under differentiated payments.
•Conservation of cultivated peat soils needs coordination among farmers.•Agglomeration payments promote coordination but studies assume homogenous costs.•We test the effectiveness of differentiated versus uniform agglomeration payments.•The two payments design are equally environmentally effective.•Differentiated payments are more cost effective but yield higher income inequality.
The use of laboratory experiments to study issues in agricultural policy has grown in prominence within the fields of agricultural and environmental economics. Such experiments are often conducted ...with university students and framed in an manner. This raises questions about whether the findings of these experiments provide reliable insights on the behaviour of actual agents in real settings. We contribute to this methodological debate by analysing the impacts of sample population and framing on behaviour in the experiment and on two policy effects: the direction and the magnitude of the policy impact. We also examine the channels through which differences in results may occur. For this, we test if behaviour is correlated with a set of covariates collected from our samples, including socio‐demographics, social and risk preferences. Our main finding is that the type of subject significantly affects the magnitude of the policy impact. The two populations differ substantially in the representation of key characteristics and preferences, which in consequence affects behaviour in the experiment. We find no significant impact of framing on behaviour.
We conducted a pre-registered randomised lab-in-the-field online experiment in Beijing, China, to explore the relationship between acute air pollution and anti-social behaviour. Our novel ...experimental design exploits naturally occurring discontinuities in pollution episodes to mimic an experimental setting in which pollution exposure is exogenously manipulated, thus allowing us to identify a causal relationship. Participants were randomly assigned to be surveyed on either high pollution or low pollution days, thereby exogenously varying the degree of pollution exposure. In addition, a subset of individuals surveyed on the high-pollution days received an additional ‘pollution alert’ to explore whether providing air pollution warnings influences (protective) behaviour. We used a set of well-established incentivised economic games to obtain clean measures of anti-social behaviour, as well as a range of secondary outcomes which may drive the proposed pollution-behaviour relationship. Our results indicate that exposure to acute air pollution had no statistically significant effect on anti-social behaviour, but significantly reduced both psychological and physiological well-being. However, these effects do not remain statistically significant after adjusting for multiple hypothesis testing. We find no evidence that pollution affects cognitive ability, present bias, discounting, or risk aversion, four potential pathways which may explain the relationship between pollution and anti-social behaviour. Our study adds to the growing calls for purposefully designed and pre-registered experiments that strengthen experimental (as opposed to correlational or quasi-experimental) identification and thus allow causal insights into the relationship between pollution and anti-social behaviour.
•We experimentally explore the link between air pollution and anti-social behaviour.•Acute exposure had no statistically significant effect on anti-social behaviour.•Pollution marginally reduced both psychological and physiological well-being.•Pollution did not affect cognitive ability, time preferences, or risk aversion.•More purposefully designed experiments are needed for credible causal evidence.
We systematically examine the acute impact of exposure to a public health crisis on anti-social behaviour and economic decision-making using unique experimental panel data from China, collected just ...before the outbreak of COVID-19 and immediately after the first wave was overcome. Exploiting plausibly exogenous geographical variation in virus exposure coupled with a dataset of longitudinal experiments, we show that participants who were more intensely exposed to the virus outbreak became more anti-social than those with lower exposure, while other aspects of economic and social preferences remain largely stable. The finding is robust to multiple hypothesis testing and a similar, yet less pronounced pattern emerges when using alternative measures of virus exposure, reflecting societal concern and sentiment, constructed using social media data. The anti-social response is particularly pronounced for individuals who experienced an increase in depression or negative affect, which highlights the important role of psychological health as a potential mechanism through which the virus outbreak affected behaviour.
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