W8 - Behavioural Insights: Internalised Motivations /Crowding and Salience Flashcards
(16 cards)
Why do we need International Environmental Agreements (IEA’s)
In single jurisdiction, government can intervene - but not globally, which is what environmental issues are
What are the problems involved in trying to get effective international cooperation?
Incentive for non cooperation - potential for free riding globally
No global jurisdiction so cannot apply a common tax
Different abatement costs
Show the potential gains from cooperation on a graph
Okay
How can we use game theory to set up a self enforcing cooperative agreement? (A Pareto efficient Nash Equilibrium)
Barrett said create an aggregate net benefit to participants and to distribute the aggregate gain across participants. Distribute via cash transfer and trade schemes.
So overall gross benefits > overall gross costs
and for each participant benefits > costs, which will create incentive for cooperation.
How can we 1) lower costs of participation 2) Deter non-participation 3) Deter non-compliance ?
1) Market mechanisms like trading schemes to promote cost savings
2) Trade sanctions, reward participants where clean countries give tech to dirty to lower their abatement costs or link issues like energy security
3) Credible penalties eg. trade sanctions
What 2 standards are important for IEA’s to function according to Barret? Does the Kyoto protocol or Paris agreement pass these standards?
Effective - benefits outweigh the costs/abatement that is close to the level that passes a global C/B test
global cost-benefit test.
Stable - Countries believe staying in the agreement is beneficial for them
Not present for Kyoto or Paris
What is Nordhaus’ proposed climate club?
Countries form a group similar to the EU, agree a set domestic carbon price, if countries decline to join penalised with tariffs
What is Carbon Border Adjustment
Mechanism (CBAM) ?
Puts a price of the carbon emissions related to a product being imported - stops production emissions being exported to different countries.
Are IEA’s effective? Use the Helsinki protocol as an example
Is effectiveness defined by compliance or improving the status quo? 2nd one
Ratified nations saw 8% reduction in sulphur emissions. Debate as to whether this would have occurred regardless of the protocol. Self selection bias with the ratified countries.
What are the 2 cognitive systems used in behavioural economics and when is each used?
1) Automatic - gut feeling, used due to limited cognitive resources, if relied on too much mistakes are made
2) Analytical - conscience thought, cognitively consuming
What is the crowding out/in effect? What is the effect using blood donations as an example
Motivation to have pro-environmental behaviour is due to external (regulation) and internal (our values, some derived from automatic system)
Paying people to donate blood crowds out (reduces) voluntary blood donors, so indirect negative consequences, so need to rely on intrinsic motivation.
Draw the crowding out graph
Okay
Give a source of crowding out and crowding in
Out - Individuals with autonomy dislike feeling they are being controlled
In - Enhanced satisfaction via social validation
How would the imposition of a fine/deposit affect people with high/low intrinsic motivation?
Fine:
High - Increasing fine decreases intrinsic motivation to do it and vice versa
Deposit:
High - doesn’t change behaviour
Low - encourages good behaviour
How can extreme weather like the UK 2018 heatwave change behaviour through 2 channels?
Bayesian updating - heatwave provides evidence, so change perceptions (long lasting stable change)
Salience effect - Makes climate considerations more prominent (short lived reactions)
