TDL Perspectives: Addressing The Climate Crisis

Jayden: So far, most environmental interventions have been applied to energy usage. One example that has been really effective in different settings is smart meters for regulating energy consumption. 

Essentially, smart meters show the consumer the quantity and price of the energy they are using in real-time. Some versions of this intervention can actually show the consumer what others are using in terms of energy, so they’re incentivized to use less energy than their neighbors. The smart meters have been really effective, and this really shows the value of making information salient to the consumer and linking it to their individual actions. 

Another effective intervention revolves around defaults in the environment. A lot of individual behavior and a lot of firm behavior is directly a product of the defaults in that setting. So if you think, for instance, to take a flight and you want to have a vegetarian option, you would have to opt into that. But you could also imagine a different reality where you have to opt-out of the vegetarian option.

Jayden: So if you want to change behavior, you have to make it extremely easy for people to exercise that behavior. A lot of our default settings are unsustainable options. From a policy perspective, it’s really helpful to change defaults to be more sustainable behaviors.

Sekoul: Since climate change is a game theory problem at an international level, what behavioral science approaches could a national leader use to lead the charge towards better policies?

Jayden: So there are a few. I think probably the most important one, which I briefly mentioned, is the simplification and framing of information. The more traditional approach to changing behavior is around regulation. In this case, simplifying information could be making environmental regulations or compliance really clear to firms to ultimately try to improve compliance. Then, of course, creating social norms around sustainable behavior; however, this usually takes a longer time to change.

Sekoul: Social norms ultimately become the biggest driver in any kind of collective behavior change. While it’s the more challenging approach, it’s probably the more sustainable one as well. How do you see social norms shifting? What drivers can shift social norms towards more sustainable behaviors?

Jayden: The first driver is probably around education and awareness. Any sort of social norm depends on an understanding of the underlying issues. In more recent years, environmental education has become a core part of school curriculums and that leads to more intergenerational change in norms. 

Unfortunately, given the pressing nature of environmental issues, this might be a bit too slow. Changing norms at the industry level is more challenging but decisions made at this level significantly perpetuate the crisis. 

Corporate social responsibility has become a norm in a lot of settings. In some ways, it’s exercised in meaningful, authentic ways, while other times it may not be. Even creating a culture at the firm level in which addressing the carbon footprint of the firm or having sustainability targets and initiatives as a part of core strategy is something that is new.

Sekoul: There has been a trend towards more corporate social responsibility programs in recent years, which could be a signal that companies see those programs as something that’s ultimately profitable, since companies are naturally focused on optimizing profits. What do you think drives that?

Jayden: It comes from the bottom but also from the top. With consumer behavior, a lot of consumers are now demanding more from the companies that they purchase from; furthermore, they have higher ethical standards for their goods. 

Then from the top are a lot of policy incentives. So, for example, in Canada, with the carbon tax system, it’s actually profitable for companies to cut down on their carbon emissions. So not only does it allow them to fulfill their social responsibility commitments, it’s also financially viable.

A lot of companies that are looking into the future can see that their investments or dependence on fossil fuels are not going to be sustainable and actually transitioning to more sustainable, lower energy intensive goods is going to be how they stay viable into the future.

Sekoul: Thinking about countries where some of these policies around climate change have been more successful and countries where they have been less successful, is there an inherent difference in either how they’ve been implemented or in the populations that they’re targeting?

Jayden: Often, countries that are most successful at addressing climate change have already gone through their phase of fossil fuel permanence and have industrialized earlier. So you have a lot of countries, like in Scandinavia, who have cut down their emissions. They are much more reliant on renewable energies today, but they had their period of economic growth and are now on the other side of the transition. 

The countries that are currently most dependent on fossil fuels are industrializing, developing countries. They are at a different point in the stages of growth. They are focused on economic development and human development. A lot of these richer countries, like Norway or Iceland, that are almost carbon neutral, have already passed through those stages of development and can focus their energy on being “green”. 

So there’s definitely some level of economic prosperity that can predict whether a country can or cannot actually implement sustainable policies directly. There’s also a geographical element as well. For some countries, it’s harder to make a transition to renewables given the natural resources that they can use to generate renewable energies, whether that’s hydro or wind power.

Sekoul: Where can behavioral science go from here? Are there ways behavioral science can be applied to environmental protection that aren’t prevalent enough?

Jayden: Yeah. A lot of past behavioral interventions have been focused on energy consumption. However, energy consumption is only responsible  for 24% of global emissions. A lot of work needs to be done creating and testing interventions that relate to other sources of emissions like agriculture, shifting global transportation, creating more local sources of some consumer goods.

The second key challenge, which is a challenge of all behavioral interventions, is scale. So a lot of these interventions have been tried in small scale settings, but it’s unknown how generalizable they are to other settings. So there needs to be more rigorous testing and evidence collected on these interventions can be implemented at scale and effectively implemented into policy and how these also relate to international environmental commitments.

The third challenge is around the effectiveness of some of these behavioral interventions over time. With carbon taxes, for example, some evidence has suggested that once consumers become sensitized to paying a tax, they will actually shift back to prior behavior. There has to be some long-term thinking about whether the behavioral intervention is actually going to create a sustainable change, or whether defaults are going to be sustained. It takes time to ensure that there are no unintended consequences of that intervention. 

Given the pressing nature of current environmental issues, we have seen that a lot of the traditional approaches to addressing them can be ineffective. Behavioral science relates to environmental challenges as our actions have direct consequences on the environment. 

Sekoul: One last question. We are currently confronted with the kind of large scale global event that becomes a common experience for pretty much everyone in the world with the coronavirus pandemic. Do you think that kind of collective experience and struggle and an alignment between what countries are doing to some extent is potentially a precedent or something that will facilitate climate change policy unions or alignments as well?

Jayden: I think there are two potential outcomes. One is pessimistic and one is optimistic. The pessimistic answer is that the economic stress that this particular global pandemic has created will incentivize national leaders to revert to the status quo and essentially have an emergency response to the current situation, which is possible. There’s a lot of pressure from citizens to essentially have a quick response that may just result in, for example, bailing out industries that are harmful to the environment.

The second, more optimistic answer is that the world has been completely destabilized, so we can take this kind of crisis to create new norms. Of course, the shared experience of going through this has created a sense of global solidarity, which has been missing in the climate change conversation and would be really critical to creating some of this international cooperation that is really necessary to overcome the collective action problem which is climate change.

There are reasons to be hopeful that this destabilizing situation has created the conditions to imagine new realities. The world that we have lived in is not just or healthy and it will not sustain us in the future. In that way, it opened up imaginations to what a new future could look like.