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Policy Track 3: Use of Behavioral Economy in Public Policy to Shift Behaviour

Could behavioural insights be an effective environmental policy tool?

 

 

Behavioural Insights (BI) is an interdisciplinary field, relying on behavioural economics and psychology in order to test the variables that influence our daily choices and decision-making. The core idea of BI is that "choice architecture" influences individuals' decision-making process. Stated simply, the way in which our environment is designed, framed and presented has great power to shape our behaviour, even more than pure economic incentives. The goal of BI researchers is to identify specific "choice architecture" variables that shape behaviour in a relatively predictable way.

BI could have a great effect in public policy, by means of bettering conventional policy tools. While these traditional policy tools often rely on "carrots and sticks" in order to fulfil their purpose, BI aims to design the choice architecture in a way that alters people’s behaviour in a predictable way, but without forbidding any options or significantly changing their economic incentive. This is realized through manipulating the "supposedly irrelevant factors", those cognitive and psychological variables that seemingly do not affect the rational economic person, but in fact have a great effect on behaviour


What did we aim at?

The main objectives of this session were to:

  1. Inform participants about the nudging approach as a sustainable behaviour tool, sharing best cases especially from the Mediterranean region;
  2. Facilitate learning and sharing of experiences regarding this tool;
  3. Encourage and establish a task force that is interested in having follow-ups on the development and use of this tool and giving feedback to the EU regarding the needs of the policy makers in the next stages of the SwitchMed Programme.

 

 

 

Moderator: Magali Outters

Speakers:

Opher Zylbertal, Israeli Ministry of Environmental Protection

Christèle Assegond, Université François Rabelais de Tours

Ignasi Puig Ventosa, ENT Environment & Management

Luc Reuter, UN Environment, Division of Economy

 

After a brief presentation of the session made by Magali Outters, Opher Zylbertal, the key note speaker, started his speech that introduced participants to the concept of behavioural economics in environmental policy. 

 

 

The goal of public policy is to shape behaviour. To date, citizens’ behaviour has been shaped through tools such as taxes. The rationale behind this is that most people believe that human beings make decisions rationally. Opher argued, however, that we actually make decisions irrationally.

Behavioural economics says that we’re not rational but that there are patterns to our rationality. Behavioural economics is a field aimed at identifying these patterns that influence our day-to-day decision-making. 

Through Choice Architecture, public policy may influence people’s behaviour. Choice Architecture is the design of different ways in which choices can be presented to consumers, and the impact of that presentation on consumer decision-making.  Through the NUDGE, public policy can alter people’s behaviour in a predictable way through choice architecture.

Opher reminded participants that in behavioural economics, things need to be checked before implementing. Some field examples were shown.

To avoid the creation of a moral issue, it is important when implementing the NUDGE to remember that choice architecture alters people’s behaviour in a predictable way without forbidding any option

“If people are more aware they might consume less?, Opher Zylbertal

This choice architecture can be implemented in the environmental policy in different ways. Some examples were given.

Choice architecture is a very new concept that has a lot of potential but that needs to overcome some challenges: (i) it’s a new terminology; (ii) it might look like a magic solution, but it’s not. It has to go hand in hand with other policy solutions; (iii) there are a lot of examples of bad implementation.

Download the presentation here.

 

 

Next to speak was Christèle Assegond from the University François Rabelais de Tours who presented the results of research on the green nudge through two examples.

The university has undertaken research within the MOVIDA Programme, whose core theme is consumption and sustainable lifestyles. Within the MOVIDA Programme, four projects on behavioural changes have been developed, including one called Chemin.

Chemin is a multidisciplinary research driven by organization of different fields (sociology, social psychology and engineering methods). The research was undertaken based on two questions:

1st Does living in a high energy performing dwelling really help to change the attitudes of occupants?

2nd Are normative feedbacks, until now mainly used in Anglo-Saxon contexts, transferable to a French context? Does their effectiveness depend on the characteristics of household members? 

They conducted research to answer these questions through an experiment in 14 low-energy social housing units in a residential neighbourhood over the course of two years.

At the beginning researches hypothesized that families would consume the same because the buildings were exactly the same. But they realized that there were a lot of differences (household consumption and also certain areas) between consumptions and the reason wasn’t the number of people living in the houses. During these two years they sent letters to neighbours (normative feedback) with their consumption data and comparing them with other. 

The main results of the study were that:

-       Low-energy buildings are not sufficient to guaranty a lower energy consumption. People don’t change their habits if they don’t have knowledgeable pre-requisites.

-       The feedback (letters) is better understood by people who already have knowledge about energy issues.

-       For most households, the information was not understood and did not lead to behavioural change. 

After that, they gave the feedback to families in a different way (more and more complex information) and they had better results.

Main conclusions were:

-       Information is essential in order to change the behaviour of people.

-       Information have to be presented in a specific way, otherwise it doesn’t have any impact. You have to adapt to the context

-       People need support to understand it.

Download the presentation here.

 

 

Ignasi Puig Ventosa, ENT Environment and Management, first gave an overview of economic incentives of waste management such as extended producer responsibility, taxes, waste charges etc.

Afterwards he provided an overview of waste management in Catalonia (e.g. graphic on the evolution of waste generation or graphic on the evolution of separate collection).

Then, he presented some economic instruments relating to waste management:

-       The door-to-door collection and Pay as you throw (PAYT): In Catalonia there’s a quite limited experience, now there are 130 municipalities applying it. Door-to-door collection is a pre-requisite for PAYT.

Comparing the use of containers and the door-to-door collection (DtD), many differences are evident. For instance, in the door-to-door collection there’s one day for each waste fraction therefore collecting waste separately becomes the easiest option. On the contrary, street containers are “opened? 24/7 and so the most convenient option is all-in-one bag.

Compared with the rest of Catalonia, municipalities implementing DtD have reduced the amount of waste generated and the impurities in the biowaste fraction.  

So the Pay waste charges imply a net reduction of municipal solid waste, increase % of separate collection and a quite significant reduction of refuse.

-       Deposit refund schemes

It’s a surcharge placed in a product when is purchased. When the product is returned the consumer gets the money back. It hasn’t been applied in Catalonia yet.

The recovery levels depend very much on the value of the deposit.

-       Taxes of certain products (ecological taxes)

Ignasi explained the case of the Irish plastic bag tax. They have added a tax of 15 cents per bag which is paid by the consumer. The revenues go to a fund dedicated to waste prevention. They had a reduction of 90% of bags used.   

-       Landfill and incineration taxes

Ignasi explained the functioning of landfill and incineration taxes in Catalonia, the distribution of revenues and the main results.     

 

The main conclusions of Ignasi’s presentations were that

(i) economic incentives are effective in changing the behaviour of citizens, companies and public administrations;

(ii), the intensity of changes depends on the how difficult they are to undertake;

(iii) long- and short-term response may be different; (iv) the use of economic instruments has to go in parallel with the use of more traditional command and control approaches and other innovative instruments; and

(iv) there’s a need for coherence between the use of economic instruments and the rest of policies.

Download the presentation here.

 

Finally, Luc Reuter of UNEP Division of Economy, talked about the role of sustainable consumption in the Sustainable Consumption and Production (SCP) approach. Behavioural shift and SCP are very linked since behavioural changes can be made in all the stages of the life cycle.

Luc previewed the initial findings and recommendations of a study on behavioural change of UNEP that will be published in 2016.  

Influencing human behaviour is very challenging because our decisions are not predictable. The main barriers to using this approach are: decisions are result of habits (not real decisions), consumers are not aware of the impact of their decisions, and the information consumers receive is frequently confusing.

He then provided three practical examples in the areas of water, transport and food. The example of food concerned an initiative lead by UK Waste Resource and Action Program that launched the program “Love Food, Hate Waste? in 2007. This program included activities such as encouraging consumers to make a shopping plan, publishing recipes using leftovers and giving tips on how to properly store food.  The results were that from 2007 to 2010 there was 13% decrease in food waste. 

Within the Consumer Information Programme of UNEP, a working group is being established to investigate and potentially test what drives individual behaviour, and to collate existing case studies and knowledge, in view of setting actions that could be taken and making recommendations and proposals for the 10YFP CI-SCP.

Download the presentation here.