IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20200059.html
   My bibliography  Save this paper

Curbing Carbon: An Experiment on Uncertainty and Information about CO2 emissions

Author

Listed:
  • Davide Pace

    (University of Amsterdam)

  • Joël van der Weele

    (University of Amsterdam)

Abstract

We investigate how consumers respond to uncertainty about CO2 emission size. In an incentivized online experiment, participants can acquire a valuable good that emits an unknown amount of CO2. We find that beliefs about emission size are strongly predictive of purchases, even exceeding the effect of substantial changes in the price of the good. Moreover, information that makes beliefs more precise causes a 26% reduction in overall emissions, even though average beliefs are unchanged. The reduction occurs as the marginal willingness to pay for emission reduction declines with emission size, so people who are too optimistic about emissions are more responsive to information. We also test for the formation of self-serving beliefs. Contrary to theories of motivated reasoning, increasing the surplus from buying the product does not change patterns of attention or belief formation about emissions. Overall, the results suggest that information about CO2 impact can be an important policy lever, and that willingness-to-pay for emission reductions should take into account the size of emissions.

Suggested Citation

  • Davide Pace & Joël van der Weele, 2020. "Curbing Carbon: An Experiment on Uncertainty and Information about CO2 emissions," Tinbergen Institute Discussion Papers 20-059/I, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20200059
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/20059.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lind, Jo Thori & Nyborg, Karine & Pauls, Anna, 2019. "Save the planet or close your eyes? Testing strategic ignorance in a charity context," Ecological Economics, Elsevier, vol. 161(C), pages 9-19.
    2. Meredith, Jennifer & Robinson, Jonathan & Walker, Sarah & Wydick, Bruce, 2013. "Keeping the doctor away: Experimental evidence on investment in preventative health products," Journal of Development Economics, Elsevier, vol. 105(C), pages 196-210.
    3. Marta Serra-Garcia & Nora Szech, 2022. "The (In)Elasticity of Moral Ignorance," Management Science, INFORMS, vol. 68(7), pages 4815-4834, July.
    4. Ximeng Fang & Lorenz Goette & Bettina Rockenbach & Matthias Sutter & Verena Tiefenbeck & Samuel Schoeb & Thorsten Staake, 2020. "Complementarities in Behavioral Interventions: Evidence From a Field Experiment on Energy Conservation," CRC TR 224 Discussion Paper Series crctr224_2020_149v1, University of Bonn and University of Mannheim, Germany.
    5. Hestermann, Nina & Le Yaouanq, Yves & Treich, Nicolas, 2020. "An economic model of the meat paradox," European Economic Review, Elsevier, vol. 129(C).
    6. Katharina Momsen & Markus Ohndorf, 2019. "Information Avoidance, Selective Exposure, and Fake(?) News-A Green Market Experiment," Working Papers 2019-18, Faculty of Economics and Statistics, Universität Innsbruck.
    7. Luigi Butera & John List, 2017. "An Economic Approach to Alleviate the Crisis of Confidence in Science: With an Application to the Public Goods Game," Artefactual Field Experiments 00608, The Field Experiments Website.
    8. Linda Thunström & Klaas van ’t Veld & Jason F. Shogren & Jonas Nordström, 2014. "On strategic ignorance of environmental harm and social norms," Revue d'économie politique, Dalloz, vol. 124(2), pages 195-214.
    9. Schwardmann, Peter, 2019. "Motivated health risk denial and preventative health care investments," Munich Reprints in Economics 78288, University of Munich, Department of Economics.
    10. Andreas Kappes & Anne-Marie Nussberger & Nadira S. Faber & Guy Kahane & Julian Savulescu & Molly J. Crockett, 2018. "Uncertainty about the impact of social decisions increases prosocial behaviour," Nature Human Behaviour, Nature, vol. 2(8), pages 573-580, August.
    11. Pascaline Dupas, 2009. "What Matters (and What Does Not) in Households' Decision to Invest in Malaria Prevention?," American Economic Review, American Economic Association, vol. 99(2), pages 224-230, May.
    12. Johannes Diederich & Timo Goeschl, 2014. "Willingness to Pay for Voluntary Climate Action and Its Determinants: Field-Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(3), pages 405-429, March.
    13. William Nordhaus, 2019. "Climate Change: The Ultimate Challenge for Economics," American Economic Review, American Economic Association, vol. 109(6), pages 1991-2014, June.
    14. Roland Bénabou & Jean Tirole, 2016. "Mindful Economics: The Production, Consumption, and Value of Beliefs," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 141-164, Summer.
    15. Björn Bartling & Roberto A. Weber & Lan Yao, 2015. "Do Markets Erode Social Responsibility?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(1), pages 219-266.
    16. Karl Schlag & James Tremewan & Joël Weele, 2015. "A penny for your thoughts: a survey of methods for eliciting beliefs," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 457-490, September.
    17. Schwardmann, Peter, 2019. "Motivated health risk denial and preventative health care investments," Journal of Health Economics, Elsevier, vol. 65(C), pages 78-92.
    18. Ximeng Fang & Lorenz Goette & Bettina Rockenbach & Matthias Sutter & Verena Tiefenbeck & Samuel Schoeb & Thorsten Staake, 2020. "Complementarities in Behavioral Interventions: Evidence From a Field Experiment on Energy Conservation," CRC TR 224 Discussion Paper Series crctr224_2020_149, University of Bonn and University of Mannheim, Germany.
    19. Zachary Grossman & Joël J. van der Weele, 2017. "Self-Image and Willful Ignorance in Social Decisions," Journal of the European Economic Association, European Economic Association, vol. 15(1), pages 173-217.
    20. Francesca Gino & Michael I. Norton & Roberto A. Weber, 2016. "Motivated Bayesians: Feeling Moral While Acting Egoistically," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 189-212, Summer.
    21. Ashraf, Nava & Jack, B. Kelsey & Kamenica, Emir, 2013. "Information and subsidies: Complements or substitutes?," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 133-139.
    22. Feiler, Lauren, 2014. "Testing models of information avoidance with binary choice dictator games," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 253-267.
    23. Heiner Schumacher & Iris Kesternich & Michael Kosfeld & Joachim Winter, 2017. "One, Two, Many—Insensitivity to Group Size in Games with Concentrated Benefits and Dispersed Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(3), pages 1346-1377.
    24. Christine L. Exley, 2015. "Excusing Selfishness in Charitable Giving: The Role of Risk," Discussion Papers 15-013, Stanford Institute for Economic Policy Research.
    25. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 67-80, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alejandro Hirmas & Jan B. Engelmann, 2024. "Learning the value of Eco-Labels: The role of information in sustainable decisions," Tinbergen Institute Discussion Papers 24-024/I, Tinbergen Institute.
    2. Schleich, Joachim & Alsheimer, Sven, 2024. "The relationship between willingness to pay and carbon footprint knowledge: Are individuals willing to pay more to offset their carbon footprint if they learn about its size and distance to the 1.5 °C," Ecological Economics, Elsevier, vol. 219(C).
    3. Gsottbauer, Elisabeth & Kirchler, Michael & König-Kersting, Christian, 2024. "Financial professionals and climate experts have diverging perspectives on climate action," LSE Research Online Documents on Economics 122590, London School of Economics and Political Science, LSE Library.
    4. He, Shutong & Blasch, Julia & Robinson, Peter John & van Beukering, Pieter, 2024. "Social comparison feedback in decision-making context: Environmental externality levels and psychological traits matter," Ecological Economics, Elsevier, vol. 216(C).
    5. Schöller, Vanessa & Ulmer, Clara, 2023. "Can monetized carbon information increase pro-environmental behavior? Experimental evidence," Ecological Economics, Elsevier, vol. 206(C).
    6. Lohmann, Paul M & Gsottbauer, Elisabeth & Farrington, James & Human, Steve & Reisch, Lucia A, 2024. "Choice architecture promotes sustainable choices in online food-delivery apps," LSE Research Online Documents on Economics 125835, London School of Economics and Political Science, LSE Library.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hestermann, Nina & Le Yaouanq, Yves & Treich, Nicolas, 2020. "An economic model of the meat paradox," European Economic Review, Elsevier, vol. 129(C).
    2. Soraperra, Ivan & van der Weele, Joël & Villeval, Marie Claire & Shalvi, Shaul, 2023. "The social construction of ignorance: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 138(C), pages 197-213.
    3. Katharina Momsen & Markus Ohndorf, 2020. "Expressive Voting vs. Self-Serving Ignorance," Working Papers 2020-33, Faculty of Economics and Statistics, Universität Innsbruck.
    4. Katharina Momsen & Markus Ohndorf, 2023. "Expressive voting versus information avoidance: experimental evidence in the context of climate change mitigation," Public Choice, Springer, vol. 194(1), pages 45-74, January.
    5. Ivan Soraperra & Joël van der Weele & Marie Claire Villeval & Shaul Shalvi, 2022. "The Social Construction of Ignorance: Experimental Evidence," Post-Print hal-03907198, HAL.
    6. Momsen, Katharina & Ohndorf, Markus, 2022. "Information avoidance, selective exposure, and fake (?) news: Theory and experimental evidence on green consumption," Journal of Economic Psychology, Elsevier, vol. 88(C).
    7. Marta Serra-Garcia & Nora Szech, 2022. "The (In)Elasticity of Moral Ignorance," Management Science, INFORMS, vol. 68(7), pages 4815-4834, July.
    8. Christine L. Exley & Judd B. Kessler, 2017. "Motivated Errors," Harvard Business School Working Papers 18-017, Harvard Business School, revised May 2018.
    9. Momsen, Katharina & Ohndorf, Markus, 2023. "Information avoidance: Self-image concerns, inattention, and ideology," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 386-400.
    10. Silvia Saccardo & Marta Serra-Garcia, 2020. "Cognitive Flexibility or Moral Commitment? Evidence of Anticipated Belief Distortion," CESifo Working Paper Series 8529, CESifo.
    11. Lata Gangadharan & Philip J. Grossman & Nina Xue, 2021. "Identifying self-image concerns from motivated beliefs: Does it matter how and whom you ask?," Monash Economics Working Papers 2021-17, Monash University, Department of Economics.
    12. Bachler, Sebastian & Haeussler, Stefan & Momsen, Katharina & Stefan, Matthias, 2024. "Do people willfully ignore decision support? Evidence from an online experiment," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302404, Verein für Socialpolitik / German Economic Association.
    13. Hillenbrand, Adrian & Verrina, Eugenio, 2022. "The asymmetric effect of narratives on prosocial behavior," Games and Economic Behavior, Elsevier, vol. 135(C), pages 241-270.
    14. Momsen, Katharina & Ohndorf, Markus, 2020. "Information Avoidance, Selective Exposure, and Fake(?) News - A Market Experiment," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224637, Verein für Socialpolitik / German Economic Association.
    15. Peter Schwardmann & Egon Tripodi & Joël J. van der Weele, 2019. "Self-Persuasion: Evidence from Field Experiments at Two International Debating Competitions," CESifo Working Paper Series 7946, CESifo.
    16. Christine L. Exley, 2020. "Using Charity Performance Metrics as an Excuse Not to Give," Management Science, INFORMS, vol. 66(2), pages 553-563, February.
    17. Marie Claire Villeval, 2019. "Comportements (non) éthiques et stratégies morales," Revue économique, Presses de Sciences-Po, vol. 70(6), pages 1021-1046.
    18. Shaul Shalvi & Ivan Soraperra & Joël van der Weele & Marie Claire Villeval, 2019. "Shooting the Messenger? Supply and Demand in Markets for Willful Ignorance," Tinbergen Institute Discussion Papers 19-071/I, Tinbergen Institute.
    19. Gneezy, Uri & Saccardo, Silvia & Serra-Garcia, Marta & van Veldhuizen, Roel, 2020. "Bribing the Self," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 120, pages 311-324.
    20. Adrian Hillenbrand & Eugenio Verrina, 2018. "The differential effect of narratives prosocial behavior," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2018_16, Max Planck Institute for Research on Collective Goods, revised Jun 2020.

    More about this item

    Keywords

    CO2 emissions; sustainable consumption; economic experiments;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20200059. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.