Aiding Decision-Making to Reduce the Impacts of Climate Change

Howard Kunreuther and Elke U. Weber

No 19776, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D03 Q41 Q42 Q54 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (11)

Published as Howard Kunreuther & Elke U. Weber, 2014. "Aiding Decision Making to Reduce the Impacts of Climate Change," Journal of Consumer Policy, vol 37(3), pages 397-411.

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