The Supply of Environmentalism: Psychological Interventions and Economics

Long before behavioral economists began to combine economic theory with discoveries from psychology, environmentalists were nudging and framing and pushing their cause through psychological interventions. These interventions appear to have changed behavior by altering beliefs, norms, and preferences. However, because psychological interventions are often coarse, they have also resulted in inadvertent, offsetting side effects. This article discusses the interactions between environmental preference-making and economics, and then it examines three areas of environmental interest —electric cars, recycling, and local conservation efforts—where psychological interventions have created strong, widespread, and simple environmental views. However, in all three cases, simple environmental rules of thumb can lead to significant adverse environmental side effects. Local environmentalism, for example, may increase carbon emissions by pushing development from low emission areas, like coastal California, to high-emission areas elsewhere in the United States. I conclude with a discussion of a fourth issue: how economic analysis of the political supply of ideas can be helpful in understanding the remarkable disparity of views concerning climate change. (JEL: D00, Q5)