Advertisement

Environmental and Resource Economics

, Volume 54, Issue 4, pp 613–626 | Cite as

Can Defaults Save the Climate? Evidence from a Field Experiment on Carbon Offsetting Programs

  • Jorge E. ArañaEmail author
  • Carmelo J. León
Article

Abstract

Individual preferences for environmental policies can be influenced by the frame in which choices and decisions are presented. In this paper we present results of a field experiment on the contributions to carbon offsetting programs under two alternative treatments for the default option. The opt-in treatment asked subjects to pay for the policy proposal while the opt-out treatment asked subjects if they wanted to be excluded from payment for the policy proposal. The results show that the frame of the default option had a significant effect on the amount of money paid for the policy proposal. Subjects were more likely to accept the policy proposal if the default option was the opt-out treatment. The results have implications for the design of environmental policies.

Keywords

Carbon offsetting Defaults Environmental policy Field experiments Framing 

Notes

Acknowledgments

The authors greatly acknowledge financial support by the projects VEM2004-08558 and ECO2009-12629 of the Spanish Ministry of Education and project 200801000381 of the Agencia Canaria de Investigación (ACIISI). Useful comments and discussion with W. Michael Hanemann, Jordan Louviere, Bart Frischknecht helped to improve the piece. This paper was finished while Carmelo León was visiting the Center for the Study of Choice (CenSoc) at University of Technology of Sydney. Acknowledgment for access to an excellent and inspiring working environment is also recognized. Only the authors are responsible for the opinions expressed and potential errors in the content.

References

  1. Akter S, Brouwer R, Brander L, van Beukering P (2009) Respondent uncertainty in a contingent market for carbon offsets. Ecol Econ 68(6):1858–1863CrossRefGoogle Scholar
  2. Araña JE, León CJ (2006) Modelling unobserved heterogeneity in contingent valuation of health risks. Appl Econ 38(19):2315–2325Google Scholar
  3. Araña JE, León CJ (2007) Repeated dichotomous choice formats for elicitation of willingness to pay: Simultaneous estimation and anchoring effect. Environ Resour Econ 36(4), 475–497Google Scholar
  4. Araña JE, León CJ (2008) Do emotions matter? Coherent preferences under anchoring and emotional effects. Ecol Econ 66(4):700–711CrossRefGoogle Scholar
  5. Araña JE, León CJ, Hanemann WM (2008) Emotions and decision rules in discrete choice experiments for valuing health care programmes for the elderly. J Health Econ 27(3):753–769CrossRefGoogle Scholar
  6. Araña JE, León CJ (2005) Flexible mixture distribution modeling of dichotomous choice contingent valuation with heterogeneity. J Environ Econ Manag 50:170–188CrossRefGoogle Scholar
  7. Araña JE, León CJ (2012) Scale perception bias in the valuation of environmental risks. Appl Econ 44:2607–2617Google Scholar
  8. Araña JE, León CJ, Sergio Moreno-Gil, Zubiaurre AR (2013) A comparison of tourists’ valuation of climate change policy using different pricing frames. J Travel Res doi: 10.1177/0047287512457260
  9. Ariely D, Loewenstein G, Prelec D (2003) “Coherent arbitrariness”: stable demand curves without stable preferences. Q J Econ 118:73–106CrossRefGoogle Scholar
  10. Ayer M, Brunk HD, Ewing GM, Reid WT, Silverman E (1955) An empirical distribution function for sampling with incomplete information. Ann Math Stat 26:641–647CrossRefGoogle Scholar
  11. Bateman I, Burgess D, Hutchinson G, Matthews D (2008) Learning design contingent valuation (LDCV): NOAA guidelines, preference learning and coherent arbitrariness. J Environ Econ Manag 55:127–141CrossRefGoogle Scholar
  12. BBC (2007) Global public opinion survey on climate change. Web reference (10/12/2007): http://news.bbc.co.uk/2/shared/bsp/hi/pdfs/02_11_07bbcclimatesurvey.pdf
  13. Beshears J, Choi JJ, Laibson D, Madrian BC (2008) How are preferences revealed? J Public Econ 92(8):1787–1794CrossRefGoogle Scholar
  14. Biswas D (2009) The effects of option framing on consumer choices: making decisiosn in rational versus experiential processing modes. J Consum Behav 8(5):284–299CrossRefGoogle Scholar
  15. Camerer C, Issacharoff S, Loewenstein G, O’Donoghue T, Rabin M (2003) Regulation for conservatives: behavioral economics and the case for ‘Asymmetric Paternalism’. Univ Pa Law Rev 151(3):101–144CrossRefGoogle Scholar
  16. Carson RT, Conaway MB, Hanemann WM, Krosnick JA, Mitchell RC, Presser S (2004) Valuing oil spill prevention: a case study of california’s central coast. Kluwer, DordrechtGoogle Scholar
  17. Carlsson F (2010) Design of stated preference surveys: Is there more to learn from behavioral economics? Environ Res Econ 46:167–177CrossRefGoogle Scholar
  18. Cooper JC (1993) Optimal bid selection for dichotomous choice contingent valuation surveys. J Environ Econ Manag 24(1):25–40CrossRefGoogle Scholar
  19. DellaVigna S (2009) Psychology and economics: evidence from the field. J Econ Lit 47:315–372CrossRefGoogle Scholar
  20. Effron B, Tibshirani RBJ (1993) An introduction to the bootstrap. Chapman and Hall, LondonGoogle Scholar
  21. Geweke J (forthcoming) Nonparametric Bayesian modelling of monotone preferences for discrete choice experiments. J Econom, forthcomingGoogle Scholar
  22. Gössling S, Schumacher KP (2010) Implementing carbon neutral destination policies: issues from the Seychelles. J Sustain Tour 18(3):377–391Google Scholar
  23. Gössling S, Paul Upham JB, Ceron JP, Dubois G, Peeters P, Stradas W (2007) Voluntary carbon offsetting schemes for aviation: efficiency, credibility and sustainable tourism. J Sustain Tour 15(3)Google Scholar
  24. Gowdy JM (2008) Behavioral economics and climate change policy. J Econ Behav Organ 68(3–4):632–644CrossRefGoogle Scholar
  25. Hanemann WM, Kanninen B (1999) The statistical analysis of discrete-response CV data. In: Bateman IJ, Willis KG (eds) Valuing environmental preferences: theory and practice of the contingent valuation method in the US, EU and developing countries. Oxford University Press, OxfordGoogle Scholar
  26. Harrison GW, List JA (2004) Field experiments. J Econ Lit 42(4):1009–1055CrossRefGoogle Scholar
  27. Heckman J, Singer B (1984) A method of minimizing the impact of distributional assumptions in econometric models for duration data. Econometrica 52:271–320CrossRefGoogle Scholar
  28. Horowitz JL (1993) Semiparametric and nonparametric estimation of quantal response model. In: Maddala GS, Rao CR, Vinod HD (eds) Handbook of statistics, vol 11. Elsevier Science Publisher, BV, AmsterdamGoogle Scholar
  29. Johnson Eric, Goldstein Daniel (2003) Do defaults save lives? Science 302:39–1338Google Scholar
  30. Johnson EJ, Steffel M, Goldstein D (2005) Making better decisions: from measuring to constructing preferences. Health Psychol 24(4):817–822CrossRefGoogle Scholar
  31. Kahneman D (2003) Maps of bounded rationality: psychology for behavioral economics. Am Econ Rev 93:1449–1475CrossRefGoogle Scholar
  32. Kahneman D, Miller DT (1986) Norm theory: comparing reality to its alternatives. Psychol Rev 93:136–153CrossRefGoogle Scholar
  33. Kaplan EL, Meier P (1958) Nonparametric estimation from incomplete observations. J Am Stat Assoc 53(282):457–481CrossRefGoogle Scholar
  34. King G, Murray CJL, Salomon JA, Tandon A (2004) Enhancing the validity of cross-cultural comparability of measurement in survey research. Am J Political Sci Rev 98(1):191–207Google Scholar
  35. Kriström B (1990) A non-parametric approach to the estimation of welfare measures in discrete response valuation studies. Land EconGoogle Scholar
  36. Kriström B (1993) Comparing continuous and discrete contingent valuation questions. Environ Res EconGoogle Scholar
  37. León CJ, Araña JE (2012) The dynamics of preference elicitation after an environmental disaster: stability and emotional load. Land Econ 88(2):362–381Google Scholar
  38. León CJ, Araña JE, de Leon J (2013a) Valuing the social cost of corruption using subjective well being data (SWB) and the technique of vignettes. Appl Econ 45(27):3863–3870Google Scholar
  39. León CJ, Araña JE, de Leon J (2013b) Correcting for scale perception bias in measuring corruption: an application to chile and spain. Soc Indic Res doi: 10.1007/s11205-012-0185-7
  40. Levin IP, Gaeth GJ (1988) Framing of attribute information before and after consuming the product. J Consumer Res 15:374–378CrossRefGoogle Scholar
  41. Levin IP, Schneider SL, Gaeth GJ (1998) All frames are not created equal: a typology and critical analysis of framing effects. Organ Behav Human Decis Process 76:149–188CrossRefGoogle Scholar
  42. List JA (2003) Does market experience eliminate market anomalies? Q J Econ 118(1):41–71CrossRefGoogle Scholar
  43. Loewenstein G, Haisley E (2008) The economist as therapist: methodological issues raised by “light” paternalism. In: Caplin A, Schotter A (eds) Foundations of positive and normative economics, vol 1 in the handbook of economic methodologies. Oxford University Press, OxfordGoogle Scholar
  44. Löfgren A, Martinsson P, Hennlock M, Sterner T (2012) Are experienced people affected by a pre-set default option—Results from a field experiment. J Environ Econ Manag 63(1):66–72CrossRefGoogle Scholar
  45. Marteau TM (1980) Framing of information: its influence upon decisions of doctors and patients. Br J Social Psychol 28:89–94CrossRefGoogle Scholar
  46. MacKerron GJ, Egerton C, Gaskell C, Parpia A, Mourato S (2009) Willingness to pay for carbon offset certification and co-benefits among (high-)flying young adults in the UK. Energy Policy 37:1372–1381CrossRefGoogle Scholar
  47. McNeil BJ, Pauker SG, Sox HC, Tversky A (1982) On the elicitation of preferences for alternative therapies. New Engl J Med 306:1259–1262CrossRefGoogle Scholar
  48. Rabin M (1994) Cognitive dissonance and social change. J Econ Behav Organ 23(2):177–194CrossRefGoogle Scholar
  49. Shogren J, Parkhurst G, Banerjee P (2010) Two cheers and a qualm for behavioral environmental economics. Environ Res Econ 46(2):235–247CrossRefGoogle Scholar
  50. Thaler RH, Sunstein C (2003) Libertarian paternalism. Am Econ Rev Am Econ Assoc 93(2):175–179CrossRefGoogle Scholar
  51. Thaler RH, Sunstein CR (2008) Nudge: improving decisions about health, wealth, and happiness. Yale University Press, New HavenGoogle Scholar
  52. Watanabe M (2011) Nonparametric estimation of mean willingness to pay from discrete response valuation data. Am J Agric Econ 92(4):1114–1135CrossRefGoogle Scholar
  53. Wilson DK, Kaplan RM, Schneiderman LJ (1987) Framing of decisions and selections of alternatives in health care. Social Behav 2:51–59Google Scholar
  54. Witt U (2010) Symbolic consumption and the social construction of product characteristics. Struct Change Econ Dyn 21:17–25CrossRefGoogle Scholar
  55. Yatchew A, Griliches Z (1984) Specification error in probit models. Rev Econ Stat 66:134–139Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2012

Authors and Affiliations

  1. 1.Institute of Tourism and Sustainable Development Economics (TIDES)Universidad de Las Palmas de Gran Canaria Las PalmasSpain
  2. 2.Center for the Study of Choice (CenSoc)University of Technology, SydneyBroadwayAustralia

Personalised recommendations