Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences

Elisabeth Gsottbauer, Jeroen C.J.M. van den Bergh

Research output: Contribution to journalArticleResearchpeer-review

56 Citations (Scopus)

Abstract

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. © 2010 Springer Science+Business Media B.V.
Original languageEnglish
Pages (from-to)263-304
JournalEnvironmental and Resource Economics
Volume49
Issue number2
DOIs
Publication statusPublished - 1 Jan 2011

Keywords

  • Climate policy
  • Evolution
  • Monetary valuation
  • Non-pecuniary instruments
  • Pro-environmental behavior
  • Rationality
  • Social norms
  • Sustainable consumption

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