Behaviorally Green: Why, Which And When Defaults Can Help

Cass Sunstein, Lucia A. Reisch

    Research output: Chapter in Book/Report/Conference proceedingBook chapterResearchpeer-review

    Abstract

    Careful attention to ‘choice architecture’ promises to open up new possibilities for environmental protection—possibilities that may be more effective than the standard tools of economic incentives, mandates, and bans. How, for example, do consumers choose between environmentally friendly products or services and alternatives that are potentially damaging to the environment but less expensive? The answer may well depend on the default rule. Indeed, green default rules may be a more effective tool for altering outcomes than large economic incentives. The underlying reasons include the powers of suggestion, inertia, and loss aversion. If well-chosen, green defaults are likely to have large effects in reducing the economic and environmental harms associated with various products and activities. Such defaults may or may not be more expensive to consumers. In deciding whether to establish green defaults, choice architects should consider consumer welfare and a wide range of other costs and benefits. Sometimes that assessment will argue strongly in favor of green defaults, particularly when both economic and environmental considerations point in their direction. But when choice architects lack relevant information, when interest group maneuvering is a potential problem, and when externalities are not likely to be significant, active choosing, perhaps accompanied by various influences (including provision of relevant information), will usually be preferable to a green default.
    Careful attention to ‘choice architecture’ promises to open up new possibilities for environmental protection—possibilities that may be more effective than the standard tools of economic incentives, mandates, and bans. How, for example, do consumers choose between environmentally friendly products or services and alternatives that are potentially damaging to the environment but less expensive? The answer may well depend on the default rule. Indeed, green default rules may be a more effective tool for altering outcomes than large economic incentives. The underlying reasons include the powers of suggestion, inertia, and loss aversion. If well-chosen, green defaults are likely to have large effects in reducing the economic and environmental harms associated with various products and activities. Such defaults may or may not be more expensive to consumers. In deciding whether to establish green defaults, choice architects should consider consumer welfare and a wide range of other costs and benefits. Sometimes that assessment will argue strongly in favor of green defaults, particularly when both economic and environmental considerations point in their direction. But when choice architects lack relevant information, when interest group maneuvering is a potential problem, and when externalities are not likely to be significant, active choosing, perhaps accompanied by various influences (including provision of relevant information), will usually be preferable to a green default.
    LanguageEnglish
    Title of host publicationNew Perspectives For Environmental Policies Through Behavioral Economics
    EditorsFrank Beckenbach, Walter Kahlenborn
    Place of PublicationBerlin
    PublisherSpringer Science+Business Media
    Date2016
    Pages161-194
    ISBN (Print)9783319167923
    DOIs
    StatePublished - 2016

    Keywords

    • Behaviour economics
    • Environmental protection
    • Green default
    • Chioce architecture
    • Nudging

    Cite this

    Sunstein, C., & Reisch, L. A. (2016). Behaviorally Green: Why, Which And When Defaults Can Help. In F. Beckenbach, & W. Kahlenborn (Eds.), New Perspectives For Environmental Policies Through Behavioral Economics (pp. 161-194). Berlin: Springer Science+Business Media. DOI: 10.1007/978-3-319-16793-0_7
    Sunstein, Cass ; Reisch, Lucia A./ Behaviorally Green : Why, Which And When Defaults Can Help. New Perspectives For Environmental Policies Through Behavioral Economics . editor / Frank Beckenbach ; Walter Kahlenborn. Berlin : Springer Science+Business Media, 2016. pp. 161-194
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    Sunstein, C & Reisch, LA 2016, Behaviorally Green: Why, Which And When Defaults Can Help. in F Beckenbach & W Kahlenborn (eds), New Perspectives For Environmental Policies Through Behavioral Economics . Springer Science+Business Media, Berlin, pp. 161-194. DOI: 10.1007/978-3-319-16793-0_7

    Behaviorally Green : Why, Which And When Defaults Can Help. / Sunstein, Cass; Reisch, Lucia A.

    New Perspectives For Environmental Policies Through Behavioral Economics . ed. / Frank Beckenbach; Walter Kahlenborn. Berlin : Springer Science+Business Media, 2016. p. 161-194.

    Research output: Chapter in Book/Report/Conference proceedingBook chapterResearchpeer-review

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    Sunstein C, Reisch LA. Behaviorally Green: Why, Which And When Defaults Can Help. In Beckenbach F, Kahlenborn W, editors, New Perspectives For Environmental Policies Through Behavioral Economics . Berlin: Springer Science+Business Media. 2016. p. 161-194. Available from, DOI: 10.1007/978-3-319-16793-0_7