Studies in behavioural and experimental economics have found that people display certain inherent biases when making choices, which at times confound the logic of mathematical and economic rationality. Some of the key cognitive biases discussed in this literature are as follows.
6.7.1 Asymmetric discounting and loss aversion
People generally tend to give more importance to immediate or short-term events over distant or long-term ones (Weber et al. 2007), and are more keen to avoid a loss than make an effort to gain something (Kahneman and Tversky 1979; Kahneman, Knetsch and Thaler 1991). In other words, people discount future gains more than current losses. People are also very unwilling to give up something they consider theirs. This is known as the Ôendowment effectÕ (Sunstein and Thaler 2008; Thaler 1992). These biases produce decisions that are inconsistent with the economic rational choice theory. For example, duck-hunters in the US were willing to pay $247 each towards the cost of maintaining a wetland for ducks, but demanded $1044 to give up the wetland (Kagel and Roth 1995). In another study, Weber et al. (2007) found that people asked for more compensation for delaying consumption than they were prepared to pay for accelerating consumption. Preference for immediate gratification and an underestimation of future costs can result in health issues such as obesity or financial issues such as lack of savings for old age (Dawnay and Shah 2005). This has implications for environmental behaviours as well. Where a change in behaviour is perceived to come at an immediate
economic cost and personal discomfort for distant, and perhaps uncertain, gains for the environment, people are less likely to change course toward environmentally sustainable behaviour. However, the order in which options are presented can reduce the asymmetry of discounting. Weber et al (2007) showed that when people were prompted to deliberate about the benefits of delayed consumption, they were much less likely to exhibit intertemporal discounting. Moreover, Hardisty and Weber (2009) found that social norms can influence the order in which people consider decision-making choices.
6.7.2 Status quo bias and defaults
People are generally resistant to change unless the incentives to change are substantial (Thaler 1992). In a series of experiments, Samuelson and Zeckhauser (1988) showed that a default option, i.e. the one representing the status quo, is more popular than other options. Additionally, the bias for the default option increases with an increase in the number of options presented. Hence, people tend to minimise cognitive effort required to evaluate choices by defaulting to the status quo (Lichtenstein, Gregory and Irwin 2007; Irwin and Baron 2001). People may also believe that the default setter has implicitly endorsed that option as the appropriate one for them (Sunstein and Thaler 2008; Johnson and Goldstein 2003). Through real world studies and lab experiments, Pichert and Katsikopoulos (2007) demonstrated that people preferred environmentally friendly electricity providers when those were presented as the default choice. Other studies suggest that in many decision-making scenarios people prefer not to make an explicit choice and stick to the status quo (Dhar 1996; Tykocinski, Pittman and Tuttle 1995). In the domain of food choices, some scholars have attributed obesity in North America to the availability of large portion sizes as a default option in many restaurants and food outlets (Rozin et al. 2003). On the other hand, consumers were more likely to choose low-calorie food options when those were presented as a default option on the menu of a metropolitan sandwich shop (Downs, Loewenstein and Wisdom 2009). These studies show that making people switch from environmentally unsustainable choices to environmentally responsible ones would be difficult unless the desirable choices were available as a default.
6.7.3 Framing and ordering effect
How information is framed can have varying impacts on people even when essentially the same information is offered. Since people are loss averse, framing a decision in terms of avoiding a loss can be more effective than framing the same decision in terms of achieving a gain, even when quantitatively the outcome at stake is the same (Tversky and Kahneman 1992). For example, Sunstein and Thaler (2008) suggest that telling people they can save $X by conserving electricity is going to be much less effective than telling them that by not conserving electricity they will lose $X. Framing can also be used in conjunction with other behavioural influences for better impact. For example, in an experiment where taxpayers were sent different messages to increase the chance of their completing tax returns, those who were told that there was a high compliance rate (90%) were most likely to comply. Appeals to altruism, threats of legal consequences, and offering more guidance on how to fill the returns did not have a significant impact (ibid.).
The order in which choices are presented can also alter responses. When people are primed to consider benefits before losses, they are less likely to place a higher value on losses (Weber et al. 2007). Gertner (2009) cites an experiment in which people were asked to consider a two percent additional surcharge on airline tickets to fund clean technology. This surcharge was framed alternatively as a Ôcarbon offsetÕ and a Ôcarbon taxÕ. People who identified themselves as Republicans were much more willing to pay for a carbon offset than a carbon tax (due to the negative association with the tax frame within this political group). Democrats were generally willing to pay for both. The participants were also asked to note down their thoughts while considering these choices. The carbon offset frame induced both Republicans and Democrats to consider the benefits of clean technology before the economic cost to themselves of funding the technology, resulting in an overall positive response in favour of the carbon offset (Gertner 2009).
6.7.4 Finite pool of worry and single-action bias
At a given time, people can only be worried about a limited number of issues, or in other words have a Ôfinite pool of worryÕ (Weber 2006). As certain issues become more salient for a person, other issues are crowded out and lose their significance and
relevance. For example, a report by Pew Research Center (2009) found that the proportion of Americans who were seriously concerned about climate change diminished from 2006 to 2009. The onset of the financial crisis and associated concerns about unemployment seemed to have replaced concerns about the climate. A consequence of the limited capacity to deal with fear and worry is the single action bias. Weber (1997) found that often a single action taken by people may assuage their concerns about a problem so as to reduce their inclination to take further actions. Accordingly, if a person has voted for a Green candidate or bought an energy-saving appliance, their inclination to take other actions to mitigate climate change is strongly diminished. Due to the single action bias, people can take an action that may not be the most effective in dealing with the problem, and yet feel no need to take incremental actions to comprehensively address the problem. In the case of tackling food-related emissions, for instance, people may become satisfied by recycling food waste or reducing their use of packaging, but not address more potent sources of agricultural GHG emissions, such as, meat and dairy consumption.
6.7.5 Confirmation bias
People have a strong inclination to cling to their existing beliefs and practices, and in doing so, are far more likely to seek ways of justifying their beliefs and practices than confront evidence that challenges it (CRED 2009; Lewicka 1998; Gardner 1957). This is Ôconfirmation biasÕ. According to Evans (1989: 41): ÔConfirmation bias is perhaps the best known and most widely accepted notion of inferential error to come out of the literature on human reasoningÕ. Nickerson (1998) reviews a substantial number of studies which demonstrate that this bias is strong and pervasive. In fact, the recognition of this bias is longstanding. Francis Bacon ([1620]1939: 36) articulates the confirmation bias thus:
The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either neglects and despises, or else by some distinction sets aside and rejects; in order that by this great and pernicious predetermination the authority of its former conclusions may remain inviolate.
Many scholars have found this bias to be one of the relevant explanations of climate change denial despite a strong scientific consensus on the fundamental premise of anthropogenic climate change (Moser and Dilling 2011; Whitmarsh 2011). Also, in a
given piece of information, people often see what they are looking for, identify patterns even when they are not there and interpret information in ways that resist attempts to change their preferred hypotheses (Nickerson 1998). Consider this case from the sustainable food consumption context. Although Simon FairlieÕs book, Meat: A Benign
Extravagance, made the point that eating some meat may do no environmental harm and can support efficient utilisation of land unfit to cultivate crops for direct human consumption, the book still argued for reducing meat consumption by nearly half and farming animals in less intensive ways (Fairlie 2010). However, some journalists and commentators selectively used his bookÕs content to promote their preferred views with an inaccurate interpretation and editorial emphasis. The Daily Mail (Renton 2010), for instance, ran a piece on the book titled ÔCarnivores rejoice! Eating meat is good for the planetÕ. Individuals resist attempts to change behaviour due to confirmation bias by significantly overweighting arguments in favour of their preferred behaviour and underweighting arguments against.