Saving the World Through Climate Nagging?

With the recent 2020 change in US political direction, there's been a start at discussions on climate change responses and what America should do about it. Americans have a wide range of views on climate change, of course, from "it doesn't exist" to "the government should take action", and the issue continues to roil American politics as our desire to do good via leadership runs up against our commitment to individual freedoms.

A typical American reaction to this conflict is well-meaning advice on how we as individuals can do what we can to contribute. "I can't fix the government or those other knuckleheads, but I can do my part and convince others locally to do the same". Entire communications campaigns, NGO groups, and businesses are built on this model of individual savings in the environmental space. Paradoxically, these efforts can create more problems than they solve.

A recent Wired piece  "Want Some Eco-Friendly Tips? A New Study Says No, You Don’t" covered the impact of well-meaning but ineffective tips on ecology savings.  This discusses some underlying study work done at Georgia State's excellent risk management program on this.  For years we have heard from environmental groups about the necessity of personal action to save water, reduce landfill through recycling, cut energy usage to affect global warming… it's a long list.  To sum up: these recommendations are counterproductive.

A segment of the population reacts negatively to this kind of advice.  Couched in libertarian arguments about infringement on freedom, some will put a political spin on recommendations and do the exact opposite.  Look at mask-wearing as a preventative measure for COVID-19 spread.  The evidence on this method's effectiveness is broad and non-controversial.  But in America's highly polarized, individualistic environment, the advice wasn't taken consistently.  What eventually did work: telling businesses that masks were required indoors, and fining non-compliant businesses.

The author of the WIRED piece cites "ecopiety" as an issue, talking about the virtue signaling and the reaction it creates.  But these misdiagnose the problem.  Sure, some eco-scofflaws have made it into a personal issue about freedom.  Some are reacting to perceptions of self-righteousness on the part of conservationists.  Some recall past "scientific" recommendations that turned out to be poorly based (I still can't figure out if we're supposed to eat eggs or not).  But to understand the real basis for decision on "micro-" actions against a "macro-" problem we can turn to behavioral economics.

One theory in behavioral economics, summarized here: individuals will act in riskier ways when there is a small chance of a large gain or when a large loss seems nearly certain to happen anyway.  Preferring loss avoidance to uncertain and diffuse gains is human nature.  For something like climate change, where many individuals are concerned about a major catastrophe that seems inevitable, their appetite is for large bets, not small ones.  Small individual actions are, correctly, seen as beside the point.

And here we come to the issue of relative gain, which I think is the real driver behind the ecopiety counterreaction.  It has been increasingly well-understood that people evaluate economic outcomes in terms of fairness at least as much as they do in terms of their personal impact.  Early studies are here and here, showing that people react much more strongly to gains and losses relative to their peers than they do to absolute improvements.  Most would rather get a raise their peers did not receive, then get a large bonus while their peers earned even more.

One common example is political debate on taxes in the US, where taxation is relatively complex with some taxes being quite progressive and others being very regressive.  A common conservative rejoinder to those advocating for higher government spending (and thus higher taxes) is "those who are concerned about this issue can pay for it".  They have a point: it is true that a lot of concern is cited, and that relatively few contributions seem to be coming in.  $4M isn't going to solve the problem either.

International relations has well understood this, in its use of game theory to examine state actions and what will work in diplomacy and war.  Relative power and relative gain are powerful drivers in both individual and societal evaluation of risk and action.

And so to what might work in eco-policy: large scale gains, implemented at the macro level, that avoid relative gain issues.  I had a recent discussion with European regulatory experts on this effect and they cited the auto industry as a good example.  Implementation of catalytic converters and mileage efficiency requirements acted as "policy guardrails," and the market was left to decide how best to achieve those aims.  Sliding-scale penalties were built in to encourage compliance without mandating solutions.  The results: a tripling of US domestic car mileage in thirty years, the US potentially peaking in overall oil consumption, and the emergence of a rational electric car market which will reduce carbon generation substantially in the long run.

Contrast this with US ethanol subsidies in an effort to drive renewable fuels into the market.  The government dictated the solution, but that solution was watered down and slanted to benefit particular constituents, as governments tend to do.  The result are ethanol subsidies that distort the market and are very difficult to repeal.  In essence, wasted money that reduces opportunities to set other rules to actually solve the market problem.

Governmental action to define broad market measures put societal risk management where it belongs – at the societal level.   It aligns outcomes and risks.  And market-level government regulation avoids emphasis on individual voluntary actions and small-scale regulations that only serve to irritate the voters needed to implement macro-level changes in democracy.  Scale measures like carbon tax schemes, passed once, will work much better than nagging individuals on  managing home energy usage.