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Behavioral economics in action – climate change

If you count the number of times in one day when your actions do not match your intentions, what do you think the ratio would be? This is a perfect example of what behavioral economics turns on; the infamous range of intent actions. Here, Joshua Gordon, who writes for FirstRand, gives an everyday example of how easily things can become pearly when the stimulus is skewed, or the stimulus does not fit the more realistic activation method. Today, how and why people make decisions are sophisticated sciences used to shape behaviors to achieve social, political, and business goals. It’s just as important climate change (a long-term concept that most people can not relate to their reality at the moment – unless, of course, you’re talking about global warming on a particularly hot day) like it’s an ARV drug policy for someone with AIDS. A fascinating read about our very human condition and evolution as a species. This article was first published on FirstRand perspective. – Chris Bateman

Behavioral economics in action – climate change

by Joshua Gordon

Behavioral economics in action – climate change

A qualified high school student is accepted to a university but gets confused when applying for financial aid and does not enroll. A person with HIV is prescribed free antiretroviral drugs but does not take them regularly. The government creates a social program to provide families with financial support when children attend school, but attendance does not improve. Some of the most difficult issues in society are not a lack of intent, merit or importance. These mistakes are due to a lack of understanding of human behavior during the last mile, the final obstacle where intent means action. We can think of it as the range of action. These are the kinds of problems that behavioral economics tries to address.

Behavioral economics uses psychological experimentation to develop theories about why and how people make decisions. In contrast to neoclassical economics models, behavioral economics recognizes that people do not always have their own interests, maximum utility, completely rational individuals with constant desires.

Behavioral economics states that our thinking is dependent on insufficient knowledge, limited cognitive processing capacity, uncertainty, and is affected by the context in which we make decisions. How difficult it would be to calculate 12 x 24 when driving at 140 km / h.

Behavioral economics has found that most of our choices are not the result of careful consideration. Instead, decisions are influenced by available and important information. People live in the moment, in that we tend to resist change, do not predict future behaviors, are dependent on distorted memory, and are affected by psychological and emotional states. We are social animals with social desires. We need trust, reciprocity and fairness, and we are sensitive to social norms and the need for self-confidence. The literature is extensive and has created credible challenges for traditional economic methods.

Understanding why and how people make decisions allows us to understand why issues such as climate change are difficult to resolve, but it also provides a framework for thinking about what can be done about them.

Behavioral economics and climate change

Conservationists have generally assumed that the most effective way to persuade people to engage in sustainable behavior has been to highlight the catastrophic consequences of the status quo. Although 63% of Americans say that climate change is affecting their communities in their homelands, no crime has prompted the masses to turn off the lights when they leave the bathroom, coordinate the charge in the dishwasher, fly less or recycle more.

Other traditional policies, such as banning bad behavior (think companies are a refuge in rivers) or tax rebates for green investments, have inconsistent results. People do not behave as traditional economic models expect.

Kevin Green, head of the Center for Behavior and the Environment at Rare, a conservation organization, states: “We had hoped that if we just told people how bad it was, how much we were messing things up, it would change their behavior, but that does not work that way. “

Getting society to make lasting change requires a nuanced understanding of the often emotional and social reasons people choose. Behavioral economics has shown that individuals are not only more irrational than politicians expect, but they are also ill-equipped to deal with environmental problems.

Problem

To begin with, people actually have trouble prioritizing future concerns over current needs. Psychologists call this the modern bias. Think of the classic marshmallow test. Children receive one marshmallow and are advised that the adult leaves the room and returns in 15 minutes. If the child does not eat the seat, another will be given. If the child eats it sweet, it does not get more. You can guess what happens next. The current bias makes it difficult to persuade people to make radical lifestyle changes today to prevent abstract, gradual disasters on the streets.

In addition, people tend to be overly paranoid about working with people we do not know to protect a common resource. For example, a campaign in the late 1990s in an English town, which aimed to encourage residents to use less water in times of scarcity, ended up encouraging the opposite (think of a toilet paper thief during Covid-19). or water bottle collection in Cape Town).

As either strong social bonds or financial incentives were absent, residents ended up consuming more water than usual for fear of running out.

In general, people have a hard time understanding a concept that is as abstract, complex and extensive as climate change – how many geese are in their mouths? – especially when the negative effects of climate change seem far-reaching. Our understanding of climate change and our willingness to do something about it is sensitive enough to be exposed to irrelevant and irrelevant information.

Eric Johnson, director of the Center for the Decision Sciences at Columbia University, has consistently found that people are more likely to believe that global warming is a real threat when asked on a hot day. This is true even though climate change is unrelated primarily to weather variability.

From a development point of view, it makes sense for people to focus on immediate threats and benefits when prioritizing survival. However, when it comes to issues such as environmental damage, people are not well prepared for the challenge. They are ill-equipped to make immediate compromises on the lifestyle needed for long-term, shared benefit. [People] are ill-equipped to make immediate compromises on the lifestyle needed for long-term, shared benefit.

Solution

While this may sound like bad news, the better we understand our shortcomings as impulsive, short-sighted and often lazy thinkers, the better equipped we are to create the kind of choice architecture needed to drive people to change their behavior.

For example, behavioral economics had given evidence that people were more likely to make progressive environmental choices when first asked to think about how we want to be remembered. In addition, one study showed that Americans are inclined to behave in an environmentally friendly way when they have thought of the country as old and mature and therefore destined for the long term.

Environmental campaigns that use stories of tragedy and darkness are common but seldom successful because people are generally good at manipulating away awkward information or information that makes them feel like their actions are inconsistent with how they look at themselves. .

The relationship between conservationists and politicians and people is important. Headlines and advertisements that encourage people to think positively about their actions or think of the world as a common group can be more effective than messages that are based on guilt and present the actions of an individual as negative.

From the point of view of economic incentive, the devil is in the details. Remember that people are biased. Most energy-saving investments require significant upfront investment in hopes of seeing a gradual return. Think about how expensive it is to put solar panels on the roof of your home. Activating behavioral economics can help solve some of these barriers. For example, SolarCity, a solar-powered company owned by Tesla, allowed people to install panels on their roofs without paying in advance in exchange for joint savings over time. The result was a dramatic increase in solar installations.

Incorporating insights from behavioral economics into a policy that seeks to address climate change or other sensitive societal issues where the range of intent and action is prominent is a powerful tool.

While our intellectual flaws have prevented society from making radical behavioral changes, behavioral economics has identified ways in which these same shortcomings can be exploited to their advantage. By harnessing the power of bias and spiritual shortcuts, politicians can force people into significant and necessary behavioral changes.

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Behavioral economics in action – climate change

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