TDL Perspectives: Addressing The Climate Crisis

• The collective action issue that makes climate change so difficult to tackle
• Hyperbolic discounting and our myopia towards the future
• What environmental policies have worked in the past
• The political feasibility of environmental policies
• How framing can dramatically impact the effectiveness of interventions
• Behavioral levers that are useful for tackling climate change
• The financial incentives that corporations face when reducing their emissions
• How behavioral science can drive climate action as we go forward
• How the COVID-19 pandemic may act as a catalyst for future change 

Sekoul:  Today’s chat is going to discuss behavioral science in the context of climate change. Let’s start with why climate change is such an important issue to tackle.

Jayden:  Climate change is one of the defining environmental challenges of our time. We’ve known about climate change for a long time but it has created a lot of challenges in the behavioral and political space for reasons that are rooted in human behavior. Climate change is a result of collective action problems, where consumption at the national level is perpetuated by individual choices that favor carbon intensive goods and materials. Climate change is a particularly challenging behavioral problem because of challenges arising primarily from psychological distance.

The idea of hyperbolic discounting essentially suggests that we value things in the present more than we value things in the future. Applied to climate change, this means that it is hard to realize how consumption in the present, like taking a long-haul flight, will translate downstream into damaging environmental outcomes. 

This also applies to spatial as well as temporal distance. It is known that a lot of the most significant climate challenges like sea level rise, food shortages, water scarcity, are going to take place in regions of the world in which the people who are consuming the most today do not live. So for people, it’s much easier to see what’s in our immediate environment and a lot of these environmental and climatic challenges are not being felt in the present and in our immediate environment. 

Sekoul: Why do you think this is a challenging issue at a policy level?

Jayden: There are a few reasons for this. The first one is related to collective action problems. So at the national level, as carbon emissions accumulate, the nation or the country is not necessarily experiencing negative consequences. This is one of the reasons international climate regimes have been largely ineffective, is that there’s no real incentive for a single country to reduce their individual impacts on climate change. 

However, the impacts of climate change will be felt later on into the future. So that’s one of the main challenges, and then, of course, some incentives in the energy industry make it quite challenging to reduce emissions at the national level.

Sekoul: What are some of the more successful policies that have actually achieved results regarding the climate?

Jayden: Probably the most effective environmental policy has been the Montreal Protocol, which addressed chlorofluorocarbons (CFCs) in the 1980s. At that time, scientists discovered the ozone hole over the Antarctic. The main reason for this was CFCs, which are a chemical used in refrigerants and industrial goods. It was believed, at the time, to be the main source of the ozone hole. So in the 1980s, policymakers from around the world came together to address this and actually created a legally binding protocol that restricted the global production of CFCs.

Because of the strict nature of this policy, essentially the industry is no longer able to produce CFCs. This method definitely favors the stick over the carrot but it was extremely effective, and today the ozone hole has largely recovered as a result of this policy effort. 

This policy worked for a few reasons. One is that it was really specific, we knew the exact nature of the problem. The second is that it was legally binding, and there was a lot of leadership from some key nations. So the US, for example, was one of the leading countries in that effort, which set a precedent for a lot of smaller nations that were not as responsible for the pollutant source.

Sekoul: If these hard-line approaches to policy making have been successful in the past, why don’t governments enforce them and create such policies at a more individual level?

Jayden: One reason is that it’s politically unpopular. A good example of this would be carbon taxes. They have been historically politically unpopular because of an essentially individual aversion to taxes in general. Plastic bag taxes, for example, have been largely unpopular in some places when they’ve been advertised as being so. So I think there’s definitely a political disincentive to implement more stick-related approaches.

Sekoul: What are policies that have failed and why?

Jayden: I think one interesting example, going back to plastic bag taxes, has been efforts in some places to actually create reward programs. So one key principle in behavioral science is loss aversion. So plastic bag taxes have been effective in some settings because when people have to start paying for something that was previously free, they feel like they’ve experienced a loss. If you’ve never paid for a plastic bag before, and then you start paying 10 cents, you feel that loss. But in some settings, policymakers have tried a different approach by using a reward.

Rather than paying 10 cents for a plastic bag, you would be reimbursed five cents, or you would save five cents off a purchase. Empirical studies have shown that the reward option of this policy has been completely ineffective — essentially, it doesn’t reduce consumption whatsoever. 

But if you have this exact same amount, but it’s a loss, you’re paying a tax on that, it can actually effectively reduce consumption. So it really shows how the intervention is framed to the consumer plays a really important role in whether it’s successful or not.

Sekoul: Can you talk a bit about the types of behavior levers that could be useful in creating effective policies that combat climate change?