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Confusing Opportunity Costs, Losses and Forgone Gains: Assessing the Effect of Communication Bias on Support for Climate Change Policy in the United States and Australia

Author

Listed:
  • Steve Hatfield-Dodds

    (CSIRO Energy Transformed Flagship, Canberra, ACT, Australia
    Centre for Climate Economics and Policy, Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia)

  • Mark Morrison

    (Institute for Land, Water and Society, School of Business, Charles Sturt University, Bathurst, New South Wales, Australia)

Abstract

Concerns about the economic impacts of achieving deep cuts in emissions are a pivotal issue in achieving the political support required for emissions reductions. We assess a widespread reference point bias in the communication of economic modelling of climate policy impacts, and find it significantly reduces public support for emissions reductions. At least one in five Americans and Australians incorrectly believe that reducing emissions would result in incomes falling from current levels - triggering loss aversion - rather than incomes rising more slowly. Avoiding this misunderstanding results in support being up to 23 percentage points higher than when impacts are presented as reductions in income from current levels. This suggests that clearly communicating that incomes continue to rise could have a larger effect on support for emissions reductions among US and Australian citizens over the next few years than increased public confidence in climate science. We conclude that improved communication of policy impacts, including that ambitious stabilisation goals are consistent with strong trend economic growth and rising incomes and employment, has a crucial role in facilitating an informed democratic response to climate change, and may be necessary for achieving a political mandate for global action.

Suggested Citation

  • Steve Hatfield-Dodds & Mark Morrison, 2010. "Confusing Opportunity Costs, Losses and Forgone Gains: Assessing the Effect of Communication Bias on Support for Climate Change Policy in the United States and Australia," CCEP Working Papers 0910, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:ccepwp:0910
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    File URL: http://ccep.anu.edu.au/data/2010/pdf/wpaper/CCEP-9-10.pdf
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    References listed on IDEAS

    as
    1. Hoehn, John P. & Randall, Alan, 1987. "A satisfactory benefit cost indicator from contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 226-247, September.
    2. Jayson L. Lusk, 2003. "Effects of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 840-856.
    3. Hatfield-Dodds, Steve & Nelson, Rohan & Cook, David C., 2007. "Adaptive Governance: An Introduction and Implications for Public Policy," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10440, Australian Agricultural and Resource Economics Society.
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    Cited by:

    1. Parton, Kevin A. & Morrison, Mark, 2011. "Communicating Climate Change: A Literature Review," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100693, Australian Agricultural and Resource Economics Society.
    2. Gernot Wagner & Richard Zeckhauser, 2012. "Climate policy: hard problem, soft thinking," Climatic Change, Springer, vol. 110(3), pages 507-521, February.
    3. Mark J Hurlstone & Stephan Lewandowsky & Ben R Newell & Brittany Sewell, 2014. "The Effect of Framing and Normative Messages in Building Support for Climate Policies," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-19, December.

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    More about this item

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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