How Behavioral Economics Can Fight Climate Change (and Maybe Save The World)

Wouldn’t it be nice if we could make it easier to be a better steward to the environment and our communities? It’s not always terribly hard, but in many cases, we can make it simpler. Read on for ideas about how we can apply behavioral economic theories to ethical and sustainable living and maybe, just maybe, make it a little easier for all of us to help save the world. 

Save the world? Am I getting too ambitious here? Maybe. Saving the world seems a little aggressive, but behavioral economics, the study of psychology as it relates to the economic decision-making processes of individuals and institutions, can offer valuable insight. Tools and lessons from behavioral economics have already proven that making a few small changes in a system can have serious impact on improving actions in a productive and meaningful way, often without much effort from or inconvenience to the change makers. In other words, we don’t always make the best choices, but behavioral economists have ideas about how to make it easier for us to make better decisions.

In their book Nudge: Improving Decisions About Health, Wealth, and Happiness, Richard Thaler and Cass Sunstein discuss how we can use tools like choice architecture to help people make better decisions, as defined by their own judgment. Humans are fallible. We often make choices that we later regret, even when we know they aren’t the best at the time we make them. Choice architecture is the way in which we set up decision-making structures, and it includes considerations like how we ask questions, the types of incentives we employ, and the default options in play when we opt not to choose at all. Choice architecture can help nudge us in ways to limit the “bad choices” we make and steer us toward decisions we know are better for us as well as our families and communities. 

Let’s Start With A Classic Example of Retirement Funding

Although not related to climate change or sustainability, the choice architecture around employer-sponsored retirement funding perfectly exemplifies this concept of helping us choose better for ourselves and is relatable to most. For many years, employers had trouble getting employees to sign up for employer-sponsored 401(k) plans. For those unfamiliar with 401(k) plans, they are United States tax-advantageous retirement accounts that often are partially funded by an employer. By contributing a portion of one’s salary to this account, the employee starts to save for retirement and receives essentially free money from their employer through a “match”. But for a few extenuating circumstances, participating in a 401(k) plan is an obvious good choice, yet far too few people elect to participate (even if they know they should be doing it). 

Behavioral economists suggested that employers change the default option. Instead of having to opt-in to the plan, new employees are automatically enrolled in the plan. They can easily opt-out of the plan, but opting-out involved making a choice and checking a box or filing a simple form to change the election. 

Merely by changing the default of participation in a retirement option from “No” to “Yes”, the government and employers have been able to increase 401(k) retirement plan participation rates substantially. It turns out that, for the most part, people didn’t actively choose not to participate in saving for retirement, they just didn’t choose anything at all. They picked the default. 

We Default to the Default, So The Default Ought To Be Darn Good

Changing the default option is, simplistically, called a nudge. Just a small push or nudge in a favorable direction can dramatically increase the number of people willing to continue in that direction and make the “preferred” choice. A “rational” person, acting in a way consistent with pure economic theory, would almost always choose to participate in an employer-sponsored retirement plan because it provides a great return on your investment when the employer contributes. It’s like free money!

Much to the chagrin of traditional economists, behavioral economists like Richard Thaler, Cass Sunstein, Daniel Kahnemann, and Amos Tversky have proven beyond a considerable doubt that humans don’t always act rationally. Many other factors play into our decision-making process and cause us to make choices that are bad for ourselves and our world. It sounds dumb in a way, but it’s unequivocally true. Complexity of choices, lack of experience in a field, infrequency of making a particular type of decision, and immediate gratification pose just a few of the challenges we face when trying to make the “right decision” all the time. 

Why This Matters for Climate Change and Sustainability 

Thaler and Sunstein have a lot to say on this matter in their book. I recommend reading the book if you’re interested in digging deeper into behavioral influences on decision making. For purposes of a focused discussion, I’ll consider only their idea of setting a good default within a choice architecture. We know with certainty that humans often rely on the default option for simplicity (at the very least). We are inundated with information and choices all day, so relying on the default for many of our decisions is paramount in getting through an average day. In that context, how can we change the default of everyday decisions to make it easier for all of us to make better choices for the environment?

Understanding human tendency to default to the default option or stick with the status quo might explain, in part, the level of disrespect we, the people of this earth, collectively show for the planet and our communities. Most of us agree that climate change is real. I think we can all agree that exponential growth of landfills isn’t exactly ideal and oceans filled with plastic isn’t the future toward which we strive. We say we care about our environment, yet most of us don’t do anything about it. 

Why Don’t We Act?

As I mentioned above, there are some very understandable reasons why we make bad choices. In the context of climate change, many of us don’t know or fully understand the realities; it’s so complex! We don’t see the consequences of our actions up close and personal all that often, so we brush them under the rug. When we do make good choices, we receive little feedback to confirm that our choice actually mattered. Further, we don’t want to feel like social outliers in a world committed to the status quo. 

Even more consequential, many infrastructure and social systems are set up in ways that make practicing environmentally-conscious habits really friggin’ hard! Even if we are willing to open our eyes to the realities and go against the grain, it’s still not an easy option to execute. 

Let’s Design Good Choice Architecture and Change the Default Option

Why not make it easier to be kind to our earth??! Let’s give everyone a little nudge to do the right thing. Let’s take advantage of the Nobel prize winning research those aforementioned behavioral economists completed and put it to good use to save the world!

If you like this post, you might also enjoy reading about focusing on the low-hanging fruit with respect to sustainable living. In this post, I took another look, from a different angle, at making our journey toward more sustainable living easier for everyone. 

So What Do I Mean? What Does This Actually Look Like?

If we were willing to modify current default options in our everyday lives for the betterment of the environment, what does this really mean? I reached out to my counterparts in the Ethical Writers and Creatives coalition as well as posed this question on Instagram to gather up some ideas about how we can make our default options more sustainable and environmentally-friendly. While these are only a few ideas and won’t alone save the world, hopefully they can get us all thinking about better ways to reset the defaults in our own lives to help ourselves and our communities be better stewards to the world. 

Note: The following ideas are not quotes. I included some of my own thoughts with several of the ideas, but initial ideas came from others, where identified below. 

Easy Ways to Change Default Options to Make It Easier to Be Eco-Conscious Consumers

At Home

Paperless Billing and Receipts | Billing and account updates as well as store receipts ought to default to email instead of paper. Those who prefer or need paper can opt for paper delivery, but we should set the default to electronic receipt to limit the amount of unnecessary paper usage. Meghann, Kiss That World

Clothes Washing Machines | Most of our clothes can be washed in cold water and it probably helps them last longer too. Machines should default to using cold water on every cycle, unless the user switches it for a particular wash cycle. Additionally, washing machines should come with microfiber filters pre-installed. Many small fibers from our clothing break down in the wash and end up in our water systems. Fibers from clothing made of synthetic fabrics like polyester end us as small bits of plastic further polluting our water ways and oceans. ~ Alden, EcoCult

Housing Codes | Update housing codes to require solar power, where it’s applicable, and grey water hook ups. Grey water is gently used water that has been used in sinks, showers, tubs, and washing machines, for example, that can be reused in toilets or for certain types of gardening and irrigation. We won’t all be able to use solar and grey water in every circumstance, but new housing codes would certainly help increase implementation of these tools when it is effective.

In Public Spaces

Public Space Lighting | Lights in public spaces like hallways and lobbies should be motion-activated. The technology is readily available, already widely used in Europe, and only uses electricity when people are in the space. Why do we need the lights on when no one is around? ~ Alden, EcoCult

Heating and Air Conditioning | Set thermostat defaults to use less energy during off hours. At night, when most people aren’t around, turn down the heat or the air conditioning to save a bit of energy.

Out And About

Single-Use Plastics Only Upon Request | Single-use plastics are things like straws, plates, cups, and cheap bags that are only used once (often for a very brief period of time), and then thrown in the trash. While they are easy to make and take seconds or minutes to consume, they take hundreds of years to decompose. Straws are tossed on the table or thrown in our drink often before we even have a chance to refuse them. And of course, for health and safety purposes, once they hit our tables or drinks, they can’t be returned. Let’s encourage restaurants and companies to offer them upon request instead of assuming we all want or need them. Most people probably wouldn’t even ask for them. 

The same applies for plastic bags at the store; ask if the customer needs or wants one before tossing everything in a bag. Many people will say yes, but at least it gets people thinking about the alternative and gives people an option to decline. 

Airport Water Bottle Stations | Some airports are already doing this really well, but we need more water bottle fill up stations in airport. I’m not talking about the drinking fountains that require you to push so hard your hand hurts and they weakly dribble out enough water to fill your bottle halfway, if you’re lucky. I want to see more of the refill stations that allow you to hold your bottle straight up against the wall and offer a steady stream of water into the bottle. These machines signal to travelers that airports expect us to go through security with empty water bottles and fill them up before we hop on the plane. They certainly make the process of bringing and filling your bottle a heck of a lot easier, thereby encouraging travelers to make this their default alternative. 

Restaurant Menus | With meat-driven diets, many restaurant menus place meat choices first and stick vegetarian options on back pages or in corners. Meat, particularly red meat, places a much heavier toll on our environment than most other types of food. Eating less red meat, particularly in areas of the world where the climate naturally supports plant agriculture, is a big boon to the health of the environment. Flipping the order in which food is presented on a menu is a perfect little nudge to encourage patrons to consider vegetarian options first without limiting them from more traditional options. ~ Alden, EcoCult

Water at Restaurants | Patrons should request water when they need or want it. All too often, water is provided when people aren’t going to drink it (especially near the end of a meal when patrons are getting ready to leave). I can’t imagine how many glasses of water are wasted?! ~ Meghann, Kiss That World

Disposal | Add compost and recycling bins next to the trash cans in the public areas and in place like restaurant kitchens. Some places already do this, but it’s not widely done (at least throughout the US). Some avid zero wasters carry their trash around with them until they find proper disposal locations, but that’s not a mainstream solution. Make it easy for people to make the right choice by having bins right next to each other so things can find the right home. I suspect this may create some issues because people aren’t diligent about following the rules, but we have to start somewhere and throwing all of our recyclables and food waste into a trash can isn’t working. 

The Government Wants To Nudge Us Too

Thaler and Sunstein aren’t the only ones dedicating their professional endeavors to helping us make better choices. Governmental groups in the United States and United Kingdom (and presumably other countries) are making headway to fixing various problems and inefficiencies within programs using nudge tactics. The “nudge unit” in the US added 12 million kids to the free-lunch program who were already eligible but not participating. Using other data already known to the school, students were automatically enrolled based on that known data instead of requiring parents to sign up their children for the program. Side note: This group existed under President Obama, so admittedly I’m not sure if it still exists today (but I’ll leave commentary on our current administration for another day…). None-the-less, when institutions implement these tools, we can spark big change with inexpensive and unobtrusive mechanisms.

This is a very short list of ways to make eco-friendly living easier and, ultimately, more sustainable. With some creative thinking, we could come up with an incredible list of ways to change the default option to make eco-friendly living easier to swallow for all of us. How do you think we could change default options to help everyone be better stewards to the Earth? Share them in the comments!! Little by little, we can kick start big changes for our world.