Status effects and environmental externalities

Environmental Studies Program, University of California, Santa Cruz, CA 95064, USA
Ecological Economics (Impact Factor: 2.52). 02/1996; 16(1):25-34. DOI: 10.1016/0921-8009(95)00076-3
Source: RePEc

ABSTRACT This paper examines a static, competitive economy where the production of a consumption good generates pollution that adversely affects human welfare. Preferences are defined over consumption, leisure, pollution, and economic status. Each person's status increases with her own consumption, but decreases with the average consumption of society. The achievement of a Pareto efficient resource allocation requires a consumption tax to offset the incentive to overconsume in the pursuit of enhanced status. In contrast with standard prescriptions, the efficient pollution tax generally exceeds the sum of individuals' marginal willingness to pay for pollution abatement. These findings remain unaltered when preferences are modified to incorporate altruistic concern for others' well-being. Altruism, however, suggests a potential role for government intervention to achieve a desirable (i.e., Pareto efficient) distribution of welfare between individuals.

1 Bookmark
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: The optimal provision of a state-variable public good, where the global climate is the prime example, is analyzed in a model where people care about their relative consumption. We consider both keeping-up-with-the-Joneses preferences (where people compare their own current consumption with others’ current consumption) and catching-up-with-the-Joneses preferences (where people compare their own current consumption with others’ past consumption) in an economy with two productivity types, overlapping generations, and optimal nonlinear income taxation. The extent to which the conventional rules for provision of state-variable public goods (a dynamic analog of the Samuelson rule) ought to be modified is shown to clearly depend on the strength of the relative concerns of both kinds, but also on the preference elicitation format.
    Journal of Environmental Economics and Management 09/2014; · 2.17 Impact Factor
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: As Nordic countries have an ambition to be sustainability leaders, enabling sustainable consumption and lifestyles with efficient policies is an important part of reaching this goal. Research demonstrates that evidence from behavioural and social science is not routinely incorporated into policy design. Consequently, some persistent misconceptions – myths –about consumer behaviour have perpetuated in the mainstream discourse, especially in policy circles. The goal of this study is to dispel myths that thwart sustainability by bringing forward existing evidence on consumer behaviour to aid the development of efficient policies in Nordic countries. A meta-analysis of the existing international research on consumer behaviour from psychology, sociology, behavioural economics, policy and anthropology was conducted. The results demonstrate that it is unrealistic to expect a sustainable society to materialise from current political strate gies. The changes needed are significant, and this study shows that policy makers need to create the “politics of possibility” towards sustainability by using the plethora of existing and innovative strategies and tools synergistically.
  • [Show abstract] [Hide abstract]
    ABSTRACT: Our dominant way of living is not sustainable and our activities as private individuals and households directly and indirectly account for a large and increasing share of total environmental impacts. These impacts are related to the structure as well as the level of consumption. In this article, research on the root causes of environmentally harmful human behavior is reviewed. Why is there no satiation of consumption in sight, even in the most affluent countries, and why do people continue to make choices that are known to be environmentally harmful? While potentially catastrophic, the harms from unsustainable consumption are mostly unintentional, which means that informational and educational means are not sufficient to produce the needed changes. They need to be implemented in concert with pervasive structural changes to make the right choice the easy choice. (PsycINFO Database Record (c) 2014 APA, all rights reserved)
    European Psychologist 01/2014; 19(2):84. · 1.31 Impact Factor

Full-text (2 Sources)

Available from
Jun 1, 2014