Green energy nudges come with a hidden cost

Credit: CC0 Public Domain

All across the United States, many households receive energy bills comparing their use to that of similar neighbors to remind them to use less energy. At most companies, employees are automatically enrolled in 401(k) plans unless they choose to opt-out, helping employees easily save for retirement. Such policies aim to "nudge" people toward making better choices, both for their future selves and for others.

Nudges like these have become popular among policymakers, because they are virtually costless to implement. However, a new study from researchers at Carnegie Mellon, Fordham and Harvard universities finds that these nudges have an unexplored cost: they can decrease support for policies with far greater impact.

"Although nudges can effectively change behavior, most have too small an impact to address societal problems on their own," said David Hagmann, a recent graduate of CMU's Department of Social and Decision Sciences, and now a postdoctoral fellow at Harvard University's Kennedy School of Government. "It appears that many people view them as substitutes for like a or cap-and-trade scheme, instead of the complements they were always intended to be."

Across a series of six studies, the researchers found that support for a carbon tax declines when the potential for a green energy nudge is introduced. In the first experiment, more than 70 percent of participants supported implementation of a carbon tax when it was the only option available. However, when they could also enroll residential energy consumers into "green energy" plans by default, only 55 percent of participants favored implementing the tax.

The researchers extended their experiments to alumni of a public policy school, to generalize their findings to a sample of experts. Not only did they replicate their previous findings, but a majority of those with public expertise and experience believed, incorrectly, that a green nudge would actually be more effective at reducing than a carbon tax.

"In an ideal world, we would have a place for both nudges and heavy-handed interventions to combat climate change," said George Loewenstein, the Herbert A. Simon University Professor of Economics and Psychology at CMU. "However, our results indicate that an effort to deploy nudges can backfire by reducing the likelihood that the most effective policies will be supported and implemented."

However, there may be a remedy: In the final experiment presented in the paper, the researchers found there may be a way to gain support for both a nudge and a carbon tax by correcting perceptions at the time of decision-making. When the researchers presented respondents with information about the small effect of a nudge or with information about how revenue from a carbon tax could be used to reduce other taxes, the nudge no longer displaced support for the carbon tax. Notably, respondents were no less likely to support the nudge after learning about its impact.

"We should use all the tools at our disposal to combat the threat of climate change," said Emily Ho, a doctoral student at Fordham University's Department of Psychology. "If we can set realistic expectations about the impact of nudges, we can deploy them without undermining the policies that are going to address most effectively—whether it's a carbon tax or a cap-and-trade system."

"Nudging out support for a tax" has been published in Nature Climate Change.

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More information: Nudging out support for a carbon tax, Nature Climate Change (2019). DOI: 10.1038/s41558-019-0474-0 ,
Journal information: Nature Climate Change

Citation: Green energy nudges come with a hidden cost (2019, May 13) retrieved 16 July 2019 from
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May 13, 2019
a majority of those with public policy expertise and experience believed, incorrectly, that a green energy nudge would actually be more effective at reducing carbon emissions than a carbon tax.

That's not necessarily wrong. The hidden assumption is that you can tax something away, when in reality states/governments end up hanging on to new sources of tax revenue because they allow the government to hide their expenses. It's called widening your tax base. When you take money from all different sources, no single source, like income tax or VAT, looks very big individually and the government expenditure can then keep going up.

Carbon tax works if the government doesn't spend the money, because the moment they start spending the additional tax they collect it becomes a commitment and they can't back out. The people who depend on it would go out of jobs and the government would become unpopular - so the government is inclined to keep the source of tax revenue indefinitely.

May 13, 2019
For example, it would be perfectly possible to tax cigarettes so much that few would buy them anymore, and the culture would eventually change to disfavor smoking entirely. When you increase the amount of tax on tobacco, the number of people smoking starts to decline.

The trick is that where the rising tax meets the falling number of smokers, there comes a point after which the amount of tax collected begins to drop as well and the government has no incentive to keep increasing the tax because they would collect less money.

The same will happen to carbon tax as well. It can only go up so high before the government itself goes "Wait a minute, if we get rid of carbon entirely, then we have to raise other taxes to pay for all these commitments and we have no excuse to do that. We can't do this."

The end result is the same: carbon based fuels remain BECAUSE they are being taxed.

May 13, 2019
use less energy

why? energy is abundant and will always be abundant, no thanks to the Quisling left.

Have you thanked a fracker today? You should.

May 14, 2019
The 'nudge' approach has been used in advertising and policymaking for some time. It's really an insidious way of going about it because it relies on duping the 'customer' into doing something rather than educating them to make their own decisions.

In the short run it works, but in the long run this kind of low level manipulation will lead to even more distrust and a general rejection of any policy at all.

May 14, 2019
neg-entropic that's real green energy

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