Behavioural economics of morality and sustainability

Conventional economics has argued that people only cooperate for fear of external constraints such as punishments. Following this view, common-pool resources could be sustainably governed with external, economic incentives. However, people exhibit pro-social behaviour when they do not always make choices only based on external incentives. Extrinsic monetary rewards to encourage pro-social behaviour can sometimes crowd out intrinsic motivation to act pro-socially. While economic incentives can manipulate people into being more selfish, social incentives will give prominence to the role of non-pecuniary drivers of pro-social behaviour. This chapter discusses the issue of governing the commons with social incentives. Individuals who consider resource conservation to be a major concern are driven by social incentives. Besides material payoff, agents with pro-environmental preferences obtain psychological payoff related to resource conservation. A society can be sustainable to the degree that its members embody such social preferences.