nep-res New Economics Papers
on Resource Economics
Issue of 2019‒04‒15
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Nudging as an Environmental Policy Instrument By Carlsson, Fredrik; Gravert, Christina; Johansson-Stenman, Olof; Kurz, Verena
  2. Optimal Prosocial Nudging By Carlsson, Fredrik; Johansson-Stenman, Olof
  3. Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election By Stefano Ramelli; Alexander F. Wagner; Richard J. Zeckhauser; Alexandre Ziegler
  4. Willingness to Pay for Mortality Risk Reduction from Air Quality Improvement: Evidence from Urban Bangladesh By Minhaj Mahmud; Yasuyuki Sawada; Eiji Yamada

  1. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Gravert, Christina (University of Copenhagen, Department of Economics); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Kurz, Verena
    Abstract: We discuss the use of green nudges – nudges intended to reduce negative externalities – as an environmental policy instrument. A review of empirical studies reveals that green nudges can have a sizeable impact on behavior and the environment, but that the effects are context dependent. In the policy discussion, drawing on both the empirical overview and basic welfare-economic models, it is emphasized that while green nudges seem to have a large potential, they offer no panacea for solving environmental problems. Instead, they should be seen as a policy instrument among others in the regulator’s toolbox. In particular, we discuss the potential role of nudging when environmental externalities can be dealt with using optimal Pigovian taxes, and when they cannot. Nudging has a greater potential when such taxes are not available or feasible.
    Keywords: nudge; environmental policy; behavior
    JEL: D90 H21 H23
    Date: 2019–04
  2. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: While nudges are still mostly associated with affecting individual choices for their own long-run interest, i.e. dealing with internalities, they are increasingly used in order to reduce externalities, such as environmental consequences. While we are gaining increasing insights into when and how nudges work, much less attention has been given to the normative aspects of nudging as a policy instrument to deal with externalities. We investigate optimal prosocial nudging under a number of different settings in a world where a conventional Pigovian tax can be used to a varying extent. We find that nudges typically only play a limited role when optimal taxes can be implemented. What we denote encouraging moral nudges, i.e. nudges where people’s choices are affected by strengthening consumers’ moral norms for doing the right thing, are more likely to play a role even when the tax is optimal compared to purely cognitive nudges. In addition, if a nudge better can target the right consumers, then it might also be optimal to use even when an optimal tax can be implemented. We also present decision rules for the optimal size of a nudge when an optimal tax cannot be implemented.
    Keywords: nudge; environmental policy; behavior
    JEL: D90 H21 H23
    Date: 2019–04
  3. By: Stefano Ramelli (University of Zurich - Department of Banking and Finance); Alexander F. Wagner (University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute); Richard J. Zeckhauser (Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)); Alexandre Ziegler (University of Zurich - Department of Banking and Finance)
    Abstract: Donald Trump's 2016 election and the subsequent nomination of Scott Pruitt, a climate skeptic, to lead the Environmental Protection Agency drastically downshifted expectations on US climate change policy. Firms' stock-price reactions to these events reveal whether their climate strategies affected their valuations. As widely reported, firms in industries with high carbon intensity benefited, at least briefly. It might be expected that companies with "responsible" strategies on climate change would also have lost value, since they were paying for actions that seemed less urgent. In fact, investors actually rewarded such firms. The analysis shows that this observed climate responsibility premium results, at least in part, from the strategic behavior of long-horizon investors who looked into the future to assess the valuation of corporations.
    Keywords: Climate change, CSR, election surprise, ESG, event study, stock returns
    JEL: G14 G38
    Date: 2018–09
  4. By: Minhaj Mahmud; Yasuyuki Sawada; Eiji Yamada
    Abstract: This paper reports on the first attempt to measure the value of statistical life (VSL) in the context of mortality risk from air pollution in urban Bangladesh, using the contingent valuation (CV) method. The CV survey was conducted in 2013 in Dhaka and Chittagong, the two most densely populated cities in the country. We asked individuals willingness to pay (WTP) for mortality risk reduction from air quality improvement program and found that willingness to pay is correlated with the socio-economic characteristics, health status, and risk perception of the respondents, consistently with existing studies. The bootstrapped mean of VSL is ranged from 17,480-22,463 USD in purchasing power parity terms, which is equivalent to 9.78-12.57 times of GDP per capita of Bangladesh. Considering our study setting, the results we obtained may be regarded as a lower bound of VSL estimates in the context of environmental risk reductions in Bangladesh.
    Keywords: value of statistical life, willingness to pay, contingent valuation, air pollution, Bangladesh
    Date: 2019–03

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