Is It Rational to Save the Environment? Maybe Not.

Give people a nudge to help them save the environment

Posted Dec 28, 2018

So many choices. Good choices and irrational options. How do you get to work? Do you drive? Is that rational based on climate change? Probably not. But is it rational based on your possible choices? Probably. And that’s the problem. You’re rational. Maybe you just need a nudge.

Usually when I think about making decisions, I worry that people aren’t rational. When we choose, we display heuristics and biases. We make quick and easy decisions. But many of those simple decisions aren’t really rational.

But sometimes, we make rational decisions. And those rational decisions can create a different type of problem.

Let’s think about going to work. You definitely have some choices about how you get to work. You could drive. Maybe you could bike. Or take public transportation. Where I live, I have all three options. I can drive, bike, or ride the bus. Because I live in a smaller city, I don’t live too far from the university where I work. So biking takes about the same amount of time as driving. It’s also cheaper. And I get exercise. Most days, I choose to bike. This also happens to be good for the environment; which is a nice bonus. For me, riding a bike is a rational option.

But for many people, driving a car is the rational option. They may live too far away to bike or walk. They may not have an option to take public transportation. Or if they do have the option, it isn’t particularly reasonable in terms of time or cost.

For example, I can use public transportation. But I almost never ride the bus. Riding the bus more than doubles my commute time. I can drive or bike to work in about 25 minutes. Taking the bus is over one hour. And the bus only comes to my neighborhood once each hour. And it costs 4 dollars per round trip. Riding the bus doubles my commute and increases my expense. Not a rational choice. And since I am rational, I almost never ride the bus.

Although using public transportation is good for the environment, many people don’t ride the bus. Instead, people drive cars. Rational for them in terms of time and generally money. How can we convince people to make a different choice? How can we convince them to use public transportation? I know I don’t want to ride the bus.  

Let me describe the bad methods that people are suggesting. For example, at my university, I have served on the parking and transportation advisory committee. When I was on the committee, there was a discussion about raising the costs to park on campus. The goal was to make driving less attractive. Punish people for driving. The idea was that if driving becomes more expensive, people will choose other options. But for most people, there really aren’t other options. Taking public transportation isn’t a viable option. Not many people can afford to double their commute time. And many people don’t live anywhere near bus routes. People also use their individual cars for other purposes before or after work (transporting their children or stopping by the store). When I was on the committee, some people concerned about the environment, suggested that people could move closer to work or to the bus routes. Of course, this was unrealistic. People choose to live where they can afford to buy or rent. Places close to the university are more expensive. In essence, the plan was to charge people more without giving them a reasonable choice. People couldn’t really choose to ride the bus or walk or bike. But they would be punished for driving anyway. And to be clear, everyone will see this as punishment and will be angry.

This is a concern I have with many plans to save the environment. Charge people more for gas, let traffic get worse, and require expensive changes for more efficient cars. Supposedly, these changes will force people to make different choices. But these changes only work if there are viable alternatives. For most people, there aren’t. The car is it. They can’t afford to buy a new, fuel-efficient car. They can’t afford to move closer to work. They can’t afford to pay more for gas. They don’t have the time to ride the bus. All you do with these types of solutions is punish people for what they do. You don’t present them with viable choices. People like to make choices. And they prefer to try to be rational. But these plans don’t give people choices.

If we want to change the choices people make, we must actually give them real choices. Systems need to change to give people rational choices. In decision making terms, researchers talk about nudges. Making small system changes that encourage people to make good long-term choices – giving people a nudge. Setting up systems so that good long-term choices are easier and better to make in the short term as well. Changing the system by making the good long-term choices easier to select is referred to as changing the choice architecture. The choice architecture is the term for your list of options, the costs and benefits, and the basic default options.

The classic example of a nudge concerned retirement planning. Do you make contributions to your retirement plan? There is a critical difference between opt-in and opt-out systems. Most retirement systems used to be opt-in. You had to choose to start making contributions, which your employer would possibly match. This would be a good long-term decision but might cost a little right now. Of course people wouldn’t choose to opt in. The nudge was to switch to an opt-out system. You are automatically enrolled. You then have to choose to opt-out. If automatically enrolled, most people don’t go to the effort of opting out. A small change in the system led to a big change in the number of people participating in retirement systems. This idea of behavioral choice nudges has led lots of people to make better retirement choices. It also helped Richard Thaler earn a Noble Prize in Economics (Thaler, 2018; Thaler & Sunstein, 2008).

We need similar nudges if we want people to save the environment. We must make it rational and easy to make those choices. We need nudges. That also means changing the choice architecture. What would that look like? If you want people to use public transportation, then society should invest in public transit. Make the public options cheaper than driving. Make the convenience not much different between the two. Build and support fast, frequent, inexpensive public transportation. Don’t make driving more expensive; make public options better, cheaper, and easier to use.

Let’s talk about light bulbs too. The cost of fancy lights bulbs is substantially more than old standard bulbs. Sticker shock in the store. But the advantage? Less energy, so cheaper over the life of that bulb. And it saves the environment by using less energy (and this is an important way to save the world). But we often make the choice in the store based on the price we see. If we want people to choose the best bulbs, in terms of the long-term health of the environment, then those bulbs need to be the best for them as well. They should clearly be the best option in the store; not the most expensive option.

Nudges help people make good decisions in the moment. A society may have goals, such as decreasing carbon use to stop global warming. If that’s our goal, then we need to make sure that when people face a choice, the good long-term choice is the most rational option in the immediate short-term as well. The best light bulb for the environment should also be the best one when you’re in the store shopping. The best way to get to work for the environment, should also be the best one when you’re making that choice every morning. That doesn’t happen by making it more expensive to drive a car. Instead, we should create systems in which there are real affordable options for people.

People are sometimes rational. People will choose to drive when the other options double or triple time to work. That’s a rational choice. Raising gas prices won’t really help if they don’t have reasonable options. Instead, they will be angry that you are taking money out of their pockets. If you want people to make better choices for the environment, create the other options and make them affordable and reasonable. Give people a nudge.

References

Thaler (2018). From cashews to nudges: The evolution of behavioral economics. American Economic Review, 108, 1265-1287.

Thaler & Sunstein (2003). Nudge: Improving decisions about health, wealth, and happiness. London: Penguin.

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