Skip to main content

Fair Air: Distributive Justice and Environmental Economics

Environmental and Resource Economics volume 46, pages 147–166 (2010)Cite this article

Abstract

Are fairness concerns of relevance to environmental economics and, if so, are they sufficiently structured to improve analysis in this field? On both of these questions, we answer in the affirmative, arguing that people’s fairness views are based on both general rules and the context, where context refers to the set of variables and persons employed to interpret and apply the principles. The fairness rules analyzed are accountability (i.e., rewards that are proportional to contributions individuals control), efficiency, need and equality. We conclude that stakeholders typically exhibit a “fairness bias”, i.e., they tend, consciously or not, to interpret and apply fairness principles in a self-serving manner, whereas the views of spectators, or impartial third parties, tend to converge significantly more. Further, we argue that fairness considerations are relevant to both descriptive and prescriptive analysis in environmental economics. These fairness concerns are reflected in the behavior of private and public decision-makers and have potentially important policy implications through the overall social objective function.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

References

  • Alesina A, Angeletos G-M (2005) Fairness and redistribution. Am Econ Rev 95(4): 960–980

    Article  Google Scholar 

  • Alpizar F, Carlsson F, Johansson-Stenman O (2008) Anonymity, reciprocity and conformity: evidence from voluntary contributions to a natural park in Costa Rica. J Public Econ 92: 986–997

    Article  Google Scholar 

  • Andreoni J (1990) Impure altruism and donations to public goods: a theory of warm-glow giving. Econ J 100: 464–477

    Article  Google Scholar 

  • Andreoni J, Miller J (2002) Giving according to GARP: an experimental test of the consistency of preferences for altruism. Econometrica 70(2): 737–753

    Article  Google Scholar 

  • Asheim GB, Froyn C, Bretteville HJ, Menz FC (2006) Regional versus global cooperation for climate control. J Environ Econ Manage 51: 93–109

    Article  Google Scholar 

  • Babcock L, Loewenstein G (1997) Explaining bargaining impasse: the role of self-serving biases. J Econ Perspect 11(1): 109–126

    Google Scholar 

  • Barrett S (1994) Self-enforcing international environmental agreements. Oxf Econ Pap 46: 878–894

    Google Scholar 

  • Barrett S (1997) Heterogeneous international environmental agreements. In: Carraro C (eds) International environmental agreemens: strategic policy issues. Edward Elgar, Cheltenham, pp 9–25

    Google Scholar 

  • Barrett S (2005) The theory of international environmental agreements. In: Mäler K-G, Vincent JR (eds) Handbook of environmental economics, vol. 3. Elsevier, Amsterdam, p 28

    Google Scholar 

  • Bazerman M, Greene J (2010) In favor of clear thinking: incorporating moral rules into a wise cost-benefit analysis. Perspect Psycol Sci 5(2): 209–212

    Article  Google Scholar 

  • Bernheim D, Rangel A (2007) Toward choice-theoretic foundations for behavioral welfare economics. Am Econ Rev 97(2): 464–470

    Article  Google Scholar 

  • Bernheim D, Rangel A (2009) Beyond revealed preference: choice-theoretic foundations for behavioral welfare economics. Q J Econ 124(1): 51–104

    Article  Google Scholar 

  • Bolton G, Ockenfels A (2000) A theory of equity, reciprocity, and competition. Am Econ Rev 90(1): 166–193

    Google Scholar 

  • Bossert W, Fleurbaey M (1996) Redistribution and compensation. Soc Choice Welf 13(3): 343–355

    Article  Google Scholar 

  • Brekke KA, Johansson-Stenman O (2008) The behavioural economics of climate change. Oxf Rev of Econ Policy 24(2): 280–297

    Article  Google Scholar 

  • Brennan G, Hamlin A (1998) Expressive voting and electoral equilibrium. Public Choice 95(1): 149–175

    Article  Google Scholar 

  • Broome J (1999) Ethics out of economics. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Buckley E, Croson R (2006) Income and wealth heterogeneity in the voluntary provision of linear public goods. J Public Econ 90: 935–955

    Article  Google Scholar 

  • Cai B, Cameron TA, Gerdes GR (2008) Distributional preferences and the incidence of costs and benefits in environmental policy. In: Paper presented at the annual European conference of environmental and resource economics in Gothenburg 2008

  • Camerer C (2003) Behavioral game theory: experiments in strategic interaction. Princeton University Press, Princeton

    Google Scholar 

  • Caplan B (2002) Systematically biased beliefs about economics: robust evidence of judgmental anomalies from the survey of Americans and economists on the economy. Econ J 112: 1–26

    Article  Google Scholar 

  • Cappelen A, Tungodden B (2003) Reward and responsibility: how should we be affected when others change their effort. Polit Philos Econ 2(2): 191–211

    Article  Google Scholar 

  • Cappelen AW, Hole AD, Sørensen EO, Tungodden B (2007) The pluralism of fairness ideals: an experimental approach. Am Econ Rev 97(3): 818–827

    Article  Google Scholar 

  • Cappelen AW, Tungodden B (2009) Rewarding effort. Econ Theory 39(3): 425–441

    Article  Google Scholar 

  • Carlsson F, Johansson-Stenman O (2009) Voting motives, group identity, and social norms. Working paper in Economics no. 366, Department of Economics, University of Gothenburg

  • Carraro C, Siniscalco D (1993) Strategies for the international protection of the environment. J Public Econ 52: 309–328

    Article  Google Scholar 

  • Carraro C, Siniscalco D (1998) International environmental agreements: incentives and political economy. Eur Econ Rev 42: 561–572

    Article  Google Scholar 

  • Charness G, Rabin M (2002) Understanding social preferences with simple tests. Q J Econ 117(3): 817–869

    Article  Google Scholar 

  • Charness G, Frechette GR, Qin C-Z (2007) Endogenous transfers in the prisoner’s dilemma game. Games Econ Behav 60(2): 287–306

    Article  Google Scholar 

  • Chaudhuri A (2009) Experiments in economics. Routledge, London and New York

    Book  Google Scholar 

  • Cherry TL, Kroll S, Shogren JF (2005) The impact of endowment heterogeneity and origin on public good contributions: evidence from the lab. J Econ Behav Organ 57(3): 357–365

    Article  Google Scholar 

  • Cox JC, Friedman D, Gjerstad S (2007) A tractable model of reciprocity and fairness. Games Econ Behav 59: 17–45

    Article  Google Scholar 

  • Croson R, Fatas E, Neugebauer T (2005) Reciprocity, matching and conditional cooperation in two public goods games. Econ Lett 87(1): 95–101

    Article  Google Scholar 

  • Croson R (2007) Theories of commitment, altruism and reciprocity: evidence from linear public goods games. Econ Inq 45(2): 199–216

    Article  Google Scholar 

  • Crumpler H, Grossman PJ (2008) An experimental test of warm glow giving. J Public Econ 92(5–6): 1011–1021

    Google Scholar 

  • Dunning D, Meyerowitz JA, Holzberg AD (1989) Ambiguity and self-evaluation: the role of idiosyncratic trait definitions in self-serving assessments of ability. J Pers Soc Psychol 57(6): 1082–1090

    Article  Google Scholar 

  • Eckel CC, Grossman PJ (1996) Altruism in anonymous dictator games. Games Econ Behav 16: 181–191

    Article  Google Scholar 

  • Engelmann D, Strobel M (2004) Inequality aversion, efficiency, and maximin preferences in simple distribution experiments. Am Econ Rev 94(4): 857–869

    Article  Google Scholar 

  • Fehr E, Schmidt KM (1999) A theory of fairness, competition and cooperation. Q J Econ 114(3): 817–868

    Article  Google Scholar 

  • Fehr E, Naef M, Schmidt KM (2006) Inequality aversion, efficiency, and maximin preferences in simple distribution experiments: comment. Am Econ Rev 96(5): 1912–1917

    Article  Google Scholar 

  • Festinger L (1957) A theory of cognitive dissonance. Stanford University Press, Palo Alto

    Google Scholar 

  • Fischbacher U, Gachter S, Fehr E (2001) Are people conditionally cooperative? Evidence from a public goods experiment. Econ Lett 71(3): 397–404

    Article  Google Scholar 

  • Fong C (2001) Social preferences, self-interest, and the demand for redistribution. J Public Econ 82(2): 225–246

    Article  Google Scholar 

  • Frohlich N, Oppenheimer JA (1992) Choosing Justice. An Experimental Approach to Ethical Theory. University of California Press, Berkeley

    Google Scholar 

  • Gächter S, Riedl A (2005) Moral property rights in bargaining with infeasible claims. Manage Sci 51(2): 249–263

    Article  Google Scholar 

  • Gächter S, Riedl A (2006) Dividing justly in bargaining problems. Soc Choice Welf 27: 571–594

    Article  Google Scholar 

  • George H (1879) Progress and poverty. Random House, San Francisco, CA

    Google Scholar 

  • Gino F, Bazerman M (2009) When misconduct goes unnoticed: the acceptability of gradual erosion in others’ unethical behavior. J Exp Soc Psychol 45(4): 708–719

    Article  Google Scholar 

  • Gruber J, Köszegi B (2001) Is addiction ‘rational’? Theory and evidence. Q J Econ 116(4): 1261–1303

    Article  Google Scholar 

  • Güth W (1994) Distributive justice: a behavioral theory and empirical evidence. In: Güth W, Brandstätter H (eds) Essays on economic psychology. Springer, Berlin, pp 153–175

    Google Scholar 

  • Güth W, Schmittberger R, Schwarze B (1982) An experimental analysis of ultimatum bargaining. J Econ Behav Organ 3(4): 367–388

    Article  Google Scholar 

  • Herne K, Mård T (2006) Three versions of impartiality: an experimental investigation. Department of Political Science: University of Turku, Finland

    Google Scholar 

  • Johansson-Stenman O (2000) On the value of life in rich and poor countries and distributional weights beyond utilitarianism. Environ Resour Econ 17: 299–310

    Article  Google Scholar 

  • Johansson-Stenman O (2008) Mad Cows, terrorism and junk food: should public policy reflect subjective or objective risks?. J Health Econ 27(2): 234–248

    Article  Google Scholar 

  • Kahneman D, Wakker P, Sarin R (1997) Back to bentham? Explorations of experienced utility. J Health Econ 112(2): 375–405

    Google Scholar 

  • Kahneman D, Thaler R (2006) Anomalies: utility maximisation and experienced utility. J Econ Perspect 20: 221–234

    Google Scholar 

  • Konow J (1996) A positive theory of economic fairness. J Econ Behav Organ 31(1): 13–35

    Article  Google Scholar 

  • Konow J (2000) Fair shares: accountability and cognitive dissonance in allocation decisions. Am Econ Rev 90(4): 1072–1092

    Article  Google Scholar 

  • Konow J (2001) Fair and square: the four sides of distributive justice. J Econ Behav Organ 46(2): 137–164

    Article  Google Scholar 

  • Konow J (2003) Which is the fairest one of all? A positive analysis of justice theories. J Econ Lit 41(4): 1186–1237

    Article  Google Scholar 

  • Konow J (2009) Is fairness in the eye of the beholder? An impartial spectator analysis of justice. Soc Choice Welfare 33(1): 101–127

    Article  Google Scholar 

  • Konow J (2010) Mixed feelings: theories of and evidence on giving. J Public Econ 94(3–4): 279–297

    Article  Google Scholar 

  • Konow J, Saijo T, Akai K (2009) Morals versus mores: experimental evidence on equity and equality. Manuscript

  • Kverndokk S (1995) Tradeable CO2 emission permits: initial distribution as a justice problem. Environ Values 4(2): 129–148

    Article  Google Scholar 

  • Lange A, Vogt C (2003) Cooperation in international environmental negotiations due to a preference for equity. J Public Econ 87(9–10): 2049–2067

    Article  Google Scholar 

  • Lange A (2006) The impact of equity-preferences on the stability of international environmental agreements. Environ Resour Econ 34: 247–267

    Article  Google Scholar 

  • Lange A, Loschel A, Vogt C, Ziegler A (2010) On the self-serving use of equity in international climate negotiations. Eur Econ Rev 54: 359–375

    Article  Google Scholar 

  • Luhan WJ, Kocher M, Sutter M (2009) Group polarization in the team dictator game reconsidered. Exp Econ 12(1): 26–41

    Article  Google Scholar 

  • Malthus T (1798) An essay on the principle of population. J.M. Dent & Sons, London

  • McConnell KE (1997) Does altruism undermine existence value. J Environ Econ Manage 32: 22–37

    Article  Google Scholar 

  • Ng Y-K (1999) Utility, informed preference, or happiness: following Harsanyi’s argument to its logical conclusion. Soc Choice Welfare 16: 197–216

    Article  Google Scholar 

  • Nozick R (1974) Anarchy, state, and Utopia. Basic Books Inc, New York

    Google Scholar 

  • O’Donoghue T, Rabin M (2006) Optimal sin taxes. J Public Econ 90: 1825–1849

    Article  Google Scholar 

  • Oberholzer-Gee F, Bohnet I, Frey B (1997) Fairness and competence in democratic decisions. Public Choice 91(1): 89–105

    Article  Google Scholar 

  • Oxoby R (2006) Paretian dictators: constraining choice in a voluntary contribution game. Department of Economics, University of Calgary

  • Roemer JE (1998) Equality of opportunity. Harvard University Press, Cambridge, Mass

    Google Scholar 

  • Ruffle B, Sosis R (2006) Cooperation and the in-group-out-group bias: a field test on Israeli kibbutz members and city residents. J Econ Behav Organ 60(2): 147–163

    Article  Google Scholar 

  • Schkade DA, Payne JW (1994) How people respond to contingent valuation questions: a verbal protocol analysis of willingness to pay for an environmental regulation. J Environ Econ Manage 26: 88–109

    Article  Google Scholar 

  • Selten R (1978) The equity principle in economic behavior. In: Gottinger H, Leinfellner W (eds) Decision theory and social ethics, issues in social choice. Reifel Publishing, Dordrecht, pp 289–301

    Google Scholar 

  • Sen AK (1970) Collective Choice and Social Welfare. North-Holland, Amsterdam

    Google Scholar 

  • Sen AK (1979) Personal utilities and public judgements: or what’s wrong with welfare economics. Econ J 89: 537–558

    Article  Google Scholar 

  • Sobel RS, Wagner GA (2004) Expressive voting and government redistribution: Testing Tullock’s Charity of the uncharitable. Public Choice 119: 143–159

    Article  Google Scholar 

  • Stahl D, Haruvy E (2009) Testing theories of behavior for extensive-form two-player two-stage games. Exp Econ 12(2): 242–251

    Article  Google Scholar 

  • Sugden R (2004) The opportunity criterion: consumer sovereignty without the assumption of coherent preferences. Am Econ Rev 94(4): 1014–1033

    Article  Google Scholar 

  • Thaler RH, Sunstein CR (2008) Nudge: improving decisions about health, wealth, and happiness. Yale University Press, New Haven

    Google Scholar 

  • Tyran J-R (2004) Voting when money and morals conflict: an experimental test of expressive voting. J Public Econ 88(7): 1645–1664

    Article  Google Scholar 

  • World Bank Development Indicators (2005) http://devdata.worldbank.org/wdi2005/Cover.htm

Download references

Author information

Authors and Affiliations

  1. Department of Economics, University of Gothenburg, Box 640, 40530, Gothenburg, Sweden

    Olof Johansson-Stenman

  2. Department of Economics, Loyola Marymount University, One LMU Drive, Suite 4200, Los Angeles, CA, 90045-2659, USA

    James Konow

  3. Erik Malmsten Guest Professor, Department of Economics, University of Gothenburg, Box 640, 40530, Gothenburg, Sweden

    James Konow

Authors
  1. Olof Johansson-Stenman
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. James Konow
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Olof Johansson-Stenman.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Johansson-Stenman, O., Konow, J. Fair Air: Distributive Justice and Environmental Economics. Environ Resource Econ 46, 147–166 (2010). https://doi.org/10.1007/s10640-010-9356-7

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10640-010-9356-7

Keywords

  • Fairness
  • Justice
  • Equity
  • Environmental policy
  • Behavioral economics
  • Experimental economics