Behavioural Economics Seminar: Green Nudging as a Policy Instrument
Open seminar on behavioural economics at Department of Food and Resource Economics.
Christina Gravert, University of Gothenburg, Sweden
Green Nudging as a Policy Instrument
This paper provides an overview of the policy instrument green nudges, i.e., nudges that are used with the purpose to reduce environmental externalities, in contrast to the predominant perspective of nudges as devices to combat internalities, i.e., to help people making good choices for themselves. We analyze both cognitive green nudges, meaning nudges that affect individual choices without directly affecting their experienced utility and moral green nudges where people’s choices are affected by strengthening individual moral norms. The review of existing empirical studies reveals that green nudges can have a large impact on behavior, and hence also for the environment and that such effects are expected to be larger in some contexts than in others. In the policy discussion, drawing on both the empirical overview and basic welfare-economic models, it is emphasized that while green nudges seem to have a large potential, they offer no panacea for solving environmental problems. They should instead be seen as a policy instrument among others in the regulator’s toolbox. In particular, the section discusses the potential role of nudging in the case that environmental externalities can be dealt with using optimal Pigovian taxes or if not. The role for nudging is larger where such taxes are not available or feasible.