Periodic Reporting for period 4 - EVOCLIM (Behavioral-evolutionary analysis of climate policy: Bounded rationality, markets and social interactions)
Berichtszeitraum: 2022-07-01 bis 2023-06-30
Distinct climate policies are studied with incomparable approaches. The project unites core features of such approaches within a behavioral-evolutionary framework, offering three advantages: evaluate the effectiveness of distinct instruments in a consistent way; examine policy mixes by considering instrument interaction from behavioral and systemic angles; & simultaneously assessing policy impacts mediated by markets and social interactions.
The project has five objectives: (1) test robustness of benchmark insights on carbon pricing: (2) test contested views on joint employment-climate effects of shifting taxes from labor to carbon; (3) examine information provision under distinct assumptions about social preferences and interactions; (4) study regulation of commercial advertising in the context of status-seeking and high-carbon consumption; and (5) explore behavioral roots of energy/carbon rebound.
The project has five objectives: (1) test robustness of benchmark insights on carbon pricing: (2) test contested views on joint employment-climate effects of shifting taxes from labor to carbon; (3) examine information provision under distinct assumptions about social preferences and interactions; (4) study regulation of commercial advertising in the context of status-seeking and high-carbon consumption; and (5) explore behavioral roots of energy/carbon rebound.
The thesis by J. Foramitti (subproject/SP2a) evaluated relative performance of key climate policies under realistic assumptions about polluters’ behaviour: carbon tax, permit market, and direct regulation. Two chapters compare policy performance on supply-side, while two others give attention to demand-side (including well-being). It also compares upstream and downstream regulation.
The thesis by F. Klein (SP2b) explored the potential for an employment double dividend (DD) of environmental tax revision (ETR). One study undertook empirical analysis of the relationship between work time, leisure activities and resulting energy use for different types of employees, with applications to two France and Finland. Next, an agent-based model (ABM) was developed to replicate a general equilibrium model (GEM) of ETR by Aubert & Chiroleu-Assouline (2019), testing the potential for “agentization” of a GEM. The ABM was then extended, e.g. with heterogeneous households in terms of education/skills, gender, employment sector, and time use.
The thesis by T. Konc (SP3a) combined market-equilibrium and agent-based modelling to climate policy in a setting of social interactions. Interdependence of agents' preferences is found to create dynamic, endogenous preferences, in turn giving rise to a "social multiplier” of climate policy. Model analysis shows that policy outcomes depend on the strength of social influence, preference polarization, social network topology, and income inequality. Analysis for Spain indicates that the social multiplier allows reducing the effective carbon tax by 38%. The social multiplier can be increased through information and social-network policies. An additional study examines dynamic opinions of socially-influenced agents for climate policy support. Support depends on individual political preferences and influence in a social network, until convergence.
The thesis by J. Castro (SP3b) examined how advertising interacts with social norms in terms of consumer choice of low- versus high carbon products. A first experiment presented participants with a pro-environmental social norm and green advertising in a simulated Facebook page to test effectiveness of enhancing low-carbon choices. Communicating a pro-environmental social norm in the presence of commercial advertising is found to have little effect as advertising dominates. A second experiment examined potential negative spillovers from initial green purchases to subsequent green purchases and climate policy support.
A selection of studies with postdocs (Dr S. Drews, Dr F. Exadaktylos and Dr I. Savin) in a lead role: Analysis of energy rebound under bounded rationality (SP4, in Nature Energy). It finds that behaviours reflecting limited rationality and willpower may increase rebound. A study of public acceptability of carbon taxation in Spain (SP1&5, in Nature Communications) conducted a survey experiment to test how revenue uses, prior knowledge, and information provision about functioning of carbon taxation affect policy support. We repeated the survey with additional questions after the outbreak of COVID-19, to test how COVID-19 affected public engagement with the climate crisis (published in Ecological Economics & PLOS One).
Dissemination involved many lectures and a dozen or so articles in newspapers & popular-science magazines. In addition, members of my team, were the main organizers of an International Conference on Low-Carbon Lifestyle Changes (LCLC) at ICTA-UAB, 6-8 May 2020. Lessons learned are reported here: Foramitti, J., S. Drews, F. Klein and T. Konc (2021). The virtues of virtual conferences. Journal of Cleaner Production 294, 126287.
The thesis by F. Klein (SP2b) explored the potential for an employment double dividend (DD) of environmental tax revision (ETR). One study undertook empirical analysis of the relationship between work time, leisure activities and resulting energy use for different types of employees, with applications to two France and Finland. Next, an agent-based model (ABM) was developed to replicate a general equilibrium model (GEM) of ETR by Aubert & Chiroleu-Assouline (2019), testing the potential for “agentization” of a GEM. The ABM was then extended, e.g. with heterogeneous households in terms of education/skills, gender, employment sector, and time use.
The thesis by T. Konc (SP3a) combined market-equilibrium and agent-based modelling to climate policy in a setting of social interactions. Interdependence of agents' preferences is found to create dynamic, endogenous preferences, in turn giving rise to a "social multiplier” of climate policy. Model analysis shows that policy outcomes depend on the strength of social influence, preference polarization, social network topology, and income inequality. Analysis for Spain indicates that the social multiplier allows reducing the effective carbon tax by 38%. The social multiplier can be increased through information and social-network policies. An additional study examines dynamic opinions of socially-influenced agents for climate policy support. Support depends on individual political preferences and influence in a social network, until convergence.
The thesis by J. Castro (SP3b) examined how advertising interacts with social norms in terms of consumer choice of low- versus high carbon products. A first experiment presented participants with a pro-environmental social norm and green advertising in a simulated Facebook page to test effectiveness of enhancing low-carbon choices. Communicating a pro-environmental social norm in the presence of commercial advertising is found to have little effect as advertising dominates. A second experiment examined potential negative spillovers from initial green purchases to subsequent green purchases and climate policy support.
A selection of studies with postdocs (Dr S. Drews, Dr F. Exadaktylos and Dr I. Savin) in a lead role: Analysis of energy rebound under bounded rationality (SP4, in Nature Energy). It finds that behaviours reflecting limited rationality and willpower may increase rebound. A study of public acceptability of carbon taxation in Spain (SP1&5, in Nature Communications) conducted a survey experiment to test how revenue uses, prior knowledge, and information provision about functioning of carbon taxation affect policy support. We repeated the survey with additional questions after the outbreak of COVID-19, to test how COVID-19 affected public engagement with the climate crisis (published in Ecological Economics & PLOS One).
Dissemination involved many lectures and a dozen or so articles in newspapers & popular-science magazines. In addition, members of my team, were the main organizers of an International Conference on Low-Carbon Lifestyle Changes (LCLC) at ICTA-UAB, 6-8 May 2020. Lessons learned are reported here: Foramitti, J., S. Drews, F. Klein and T. Konc (2021). The virtues of virtual conferences. Journal of Cleaner Production 294, 126287.
More than 50 publications have been realized, including in Nature (Energy/Sustainability/Communications), Science and PNAS journals, as well as all the top field journals in energy (Energy Policy, Energy Research & Social Science), climate policy (Climate Policy, WIREs-Climate Change, Climatic Change), environmental social science (Global Environmental Change, Ecological Economics), and environmental economics (Environmental and Resource Economics, Journal of Environmental Economics and Management).
The equilibrium and network model of the social multiplier of environmental policy with an application to carbon taxation (JEEM, 2021) and the co-dynamics of climate policy stringency and public support (GEC 2022) are both major contributions to the field, as was also recognized by the reviewers. The first combines the decisions of economic agents in markets with their mutual influence in social networks, which allows to see the net effect of regulation or carbon pricing, as well as the interaction with instruments of information provision. The second uses a cycle of economic and opinion/voting models to balance climate policy design with regard to effectiveness and feasibility. The results of both studies suggest that by ignoring the social environment in which agents make decisions, conventional climate economics models leads to incomplete or biased conclusions about the composition, effectiveness and public support of climate policy.
The first of these was planned and is in the core of the project aims. The second was not planned and the result of discussions in the team about how to combine the goals of high effectiveness (in terms of emission reduction) and critical policy support in design of climate policy.
The team as a whole also produced two joint publications which involved considerable and constructive interaction: “A Review of Agent based Modelling of Climate-Energy Policy” in WIREs Climate Change 2020, and “Designing an Effective Climate-Policy Mix: Accounting for Instrument Synergy” in Climate Policy 2021. The latter is a major contribution to the field as it brings together all the work and ideas on synergy of instruments in climate policy.
The equilibrium and network model of the social multiplier of environmental policy with an application to carbon taxation (JEEM, 2021) and the co-dynamics of climate policy stringency and public support (GEC 2022) are both major contributions to the field, as was also recognized by the reviewers. The first combines the decisions of economic agents in markets with their mutual influence in social networks, which allows to see the net effect of regulation or carbon pricing, as well as the interaction with instruments of information provision. The second uses a cycle of economic and opinion/voting models to balance climate policy design with regard to effectiveness and feasibility. The results of both studies suggest that by ignoring the social environment in which agents make decisions, conventional climate economics models leads to incomplete or biased conclusions about the composition, effectiveness and public support of climate policy.
The first of these was planned and is in the core of the project aims. The second was not planned and the result of discussions in the team about how to combine the goals of high effectiveness (in terms of emission reduction) and critical policy support in design of climate policy.
The team as a whole also produced two joint publications which involved considerable and constructive interaction: “A Review of Agent based Modelling of Climate-Energy Policy” in WIREs Climate Change 2020, and “Designing an Effective Climate-Policy Mix: Accounting for Instrument Synergy” in Climate Policy 2021. The latter is a major contribution to the field as it brings together all the work and ideas on synergy of instruments in climate policy.