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International Journal of Economics and Finance; Vol. 6, No. 7; 2014
ISSN 1916-971X E-ISSN 1916-9728
Published by Canadian Center of Science and Education
11
Gender in Environmental Context: The Effect of Property Rights,
Fines, and Empathy Nudging
Natalia V. Czap1, Hans J. Czap2, Mark E. Burbach3 & Gary D. Lynne4
1 Department of Social Sciences (Economics), University of Michigan-Dearborn, USA
2 Department of Management Studies, University of Michigan-Dearborn, USA
3 School of Natural Resources, University of Nebraska-Lincoln, USA
4 Department of Agricultural Economics and School of Natural Resources, University of Nebraska-Lincoln, USA
Correspondence: Natalia V. Czap, Department of Social Sciences (Economics), University of
Michigan-Dearborn, 4901 Evergreen Rd., Dearborn, MI 48103, USA. Tel: 1-313-583-6354. E-mail:
nczap@umich.edu
Received: April 1, 2014 Accepted: April 21, 2014 Online Published: June 25, 2014
doi:10.5539/ijef.v6n7p11 URL: http://dx.doi.org/10.5539/ijef.v6n7p11
Abstract
Experimental economics research shows that gender can often explain some of the variation in individual
behavior in experiments. This is especially true for contextualized games (corruption, environmental protection)
in which participants’ behavior is guided by homegrown values and predispositions. We examine the gender
differences in environmental behavior and the sharing of payoffs between a farmer and a water user under two
alternative property rights assignments (farmer/polluter vs. water user/victim) and three methods of feedback
(inducing empathy vs. imposing fine vs. no feedback). We found mixed evidence of gender differences
concerning the choice of levels of pollution. Overall, albeit not always statistically significant, it seems that
females are sharing with their group members more than males. Specifically, the results suggest that females are
often more empathetic than males when they are in a position of a victim (water user). In a position of a polluter
(farmer), in contrast, females and males are almost equally empathetic. Overall imposing monetary fines is
counterproductive and decreases environmentally friendly behavior (however it does not significantly affect
sharing), while empathy nudging increases sharing behavior (however it does not significantly affect
environmentally friendly behavior). Empathy nudging is more effective for females than for males. Imposing
fines, however, has no significant gender effect for either conservation or sharing behavior. Our findings provide
another argument for increased gender equality based on environmentally sustainable economic development
and thus propose a push by national governments as well as international organizations to increase the economic
role of women.
Keywords: conservation policy, empathy, environmental experiment, gender effects, property rights assignment,
water quality
1. Introduction
With the world population exceeding 7 billion in 2013 (Note 1) and economic output significantly larger than
just a few years ago, the stress on the environment has never been greater. This trend can be expected to continue
for the foreseeable future, making it imperative to figure out solutions to effectively manage our environment to
ensure that an increased standard of living for the average human being does not coincide with unsustainable
levels of resource exploitation and environmental degradation.
From a liberal economic perspective all one need to do is create a functioning market for the environment so that
marginal costs can be equated to marginal benefits and hence an optimal solution can and will be found. While
theoretically sound, this approach makes a number of strong assumptions, which are unlikely to hold in reality.
One of the assumptions is that property rights are assigned and hence negotiations over the appropriate degree of
usage can take place. Based on the Coasian Theorem it does not matter who obtains the property rights, as long
as they are clearly defined and transaction costs of negotiations are negligible. In practical terms this is of course
exceedingly unlikely to hold true for many markets, as, for example, it is hard to imagine how future generations
can appropriately participate in the negotiation for the efficient usage of a natural resource. Due to the myopic
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12
nature of the majority of economic agents resource exploitation tends to be larger than optimal. Therefore, from
a long-term environmental and economic efficiency perspective, policies may need to be put in place to curb
resource exploitation to a sustainable level.
A number of such policies have been proposed, ranging from markets with caps on the overall production in the
market (e.g., the carbon market), over incentive based schemes, such as Pigouvian taxes, to outright individual
command-and-control regulations with stringent fines on violations. The typical analysis in this field assumes a
representative agent to derive its theoretical conclusions. While this approach may allow deriving an appropriate
general estimate of the effectiveness of a particular policy design it disregards useful information for fine-tuning
of the policy. One of such heterogeneities that may provide important additional information is gender.
Laboratory and field studies on various economic and environmental contexts show that gender is often a
significant and economically relevant determinant of behavior. In experimental economics this is especially true
for contextualized games (such as corruption, environmental protection) in which participants’ behavior is
guided by homegrown values and predispositions.
In this paper we further examine the gender differences in environmental behavior and the sharing of payoffs in
the context of negative externalities and two alternative property rights assignments (polluter vs. victim). In
addition, we analyze the impact of feedback in the context of gender. Section 2 ensues with a brief review of the
relevant literature, leading to the testable hypotheses. Section 3 provides the experimental design and procedures,
followed by Section 4 with the experimental results. The paper concludes with a section on implications and
conclusions.
2. Theoretical Basis
2.1 Relevant Literature
Three streams of literature showing gender effects are relevant for this study: environmental and economic
attitudes, property rights, and empathetic behavior and punishment.
First, we discuss the link between gender and economic and environmental decisions on the individual level. The
effect of gender on economic choice is not straight forward. The experimental studies involving economic
decision making suggest that gender is moderated by psychological traits and through that affects choices. Eckel
and Grossman (1998, 2008) found that females are more generous. Croson and Gneezy (2009) found that
females are more altruistic and more sensitive to social clues. Females are also found to empathize and be able to
imagine themselves in the place of others more, as shown by Hoffman (1977), Baron-Cohen (2002, 2009), and
Goldenfeld et al. (2005). In addition, women are found to be more egalitarian and are more likely to engage in
reciprocal behavior than men, who are more competitive (Chaudhuri & Gangadharan, 2007; Croson & Buchan,
1999; Croson & Gneezy, 2009). This leads to higher degrees of self-reported environmentally concern (Mohai,
1992; Olofsson & Oehman, 2006; Xiao & Dunlap, 2007) and translates into more environmentally conscious
behavior by females in incentivized experiments (Menges & Traub, 2009; Czap & Czap, 2010; Czap et al., 2012).
Specifically, women paid more for green electricity and were free-riding less than men (Menges & Traub, 2009).
On the other hand, some studies found no significant gender differences (Bolton & Katon, 1995; Frey & Meier,
2004) or reported ambiguous results (Andreoni & Vesterlung, 2001; Cadsby et al., 2010). Andreoni and
Vesterlung (2001, p.293) noted that “men are more likely to be either perfectly selfish or perfectly selfless
whereas women tend to be “equalitarians” who prefer to share evenly”. Davidson and Freudenburg (1996) report
that the gender differences in terms of general environmental concerns are modest. However, women exhibit a
much higher level of concern in their attitudes towards specific forms of environmental risk. Mohai (1992) found
that despite of females showing greater environmental concern, they have lower rates of environmental activism.
Second, we discuss the relationship between gender, property rights, and collective management of resources.
This relationship is even less clear-cut than the previous one. One strand of literature links gender and
management of common pool resources via social capital. It is widely accepted that social capital is essential for
effective collective action (Krishna & Uphoff, 1998; Pretty, 2003; Pretty & Ward, 2001; Putnam, Leonardi, &
Nanetti, 1993; Scoones, 1998; Woolcock, 1998), which is, in turn, a key for sustainable natural resource
management (Agrawal & Gibson, 1999; Baland & Platteau, 1996; Bromley, 1992; Korten, 1986; Ostrom, 1990;
Pretty, 2002; Pretty & Smith, 2004; Reddy, 2000; Steins & Edwards, 1999; Wade, 1987). The participation of
women in collective action is a key determinant in its success (Molinas, 1998), specifically the share of women
in the group is positively correlated with the frequency of meetings, solidarity, capacity for sustained collective
action, more regenerative approaches, and better management of arising conflicts (Westermann et al., 2005).
This may be due to women being more interdependent and altruistic (Folbre, 1994; Sharma, 1980; White, 1992).
At the same time it is not entirely clear whether women are intrinsically more altruistic, or if this is an artifact of
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their social and economic environment (Jackson, 1993). Similarly, Westermann et al. (2005) does not detect a
difference in motives for collaboration in terms of altruistic or selfish between groups of varying gender
composition.
Another strand of the literature sees women as having close affinity to the environment due to their nurturing and
caring role for family and future generations (Jackson, 1993; Manion, 2002; Martine & Villarreal, 1997) and
hence the most likely choice to manage the environment at the local level (Green et al., 1998). A number of
researchers (Jackson, 1993; Rocheleau, 1995; Agrawal, 1992; Leach, 1991) argue that the difference in the role
of women is not due to inherent biological differences, but social, economic, and political dynamics.
Furthermore, gender differences in the management of natural resources may stem from the differences in
resource constraints typically faced by women and men. Generally, it is argued, women need to rely more on
common pool resources (Jackson, 1993; Martine & Villarreal, 1997) and hence face larger downsides to resource
degradation. In addition to the difference in stakes faced my men and women, there also may be a difference in
the type of social capital that is typically available to men and women. Whereas men often rely on formal
relations, women tend to favor informal relations (Agrawal, 2000; Molyneux, 2002; More, 1990; Riddell et al.,
2001).
Third, we discuss the link between gender, empathetic behavior, and the effect of punishment. Studies on
empathy conclude that women score higher on empathetic concern and perspective taking (Davis, 1980; de Corte
et al., 2007; O’Brien et al., 2013) as well as affective or emotional empathy (Toussaint & Webb, 2005).
Baron-Cohen (2009) also notes that females perform better on many empathizing tests than men. According to
O’Brien et al. (2013, p. 173) it is possible that “the gender-based differences reflect motivational differences in
self-reporting rather than actual differences in the ability to experience empathy”, because these differences are
less apparent in the studies involving alternative measures of empathy, such as facial expression and
psychological arousal (Eisenberg & Lennon, 1983).
On the other hand, the evidence from biological and neuroscientific research suggest that gender differences in
empathy run deep. The biological basis of empathy was examined by Knickmeyer et al. (2006). The authors of
that study found a correlation between prenatal testosterone levels and the empathetic behavior in four-year olds.
Neuroscientific evidence comes from the fMRI studies by Singer et al. (2006) and Schulte-Ruther et al. (2008) as
well as Rueckert & Naybar (2008) paper on the relationship between the activation of the right cerebral
hemisphere (RH) and empathy. Singer et al. (2006, p. 466) found that “empathy-related responses were
significantly reduced in males when observing an unfair person receiving pain”. Schulte-Ruther et al. (2008)
reported that females showed higher emotional expressivity and arousal in response to emotions of others than
males. Furthermore, they found that females rely on emotional resonance/mirror neurons, whereas males use a
cognitive strategy to determine their emotional response to the feelings of others. Rueckert and Naybar (2008)
found a significant correlation between RH activation on the chimeric face task (recognizing emotions) and
empathy questionnaire.
The strength of the empathetic responses to the distress or pain of others and desire for punishment has been also
shown to depend on the perception of fairness of others. In this context females and males differ in their reaction
to punishment (Singer et al., 2006). While both males and females showed similar empathy for punished fair
players in the prisoner’s dilemma game, males demonstrated less empathy for punished unfair players and higher
activation in the reward-related areas suggesting desire for revenge. Based on that Singer et al. (2006, p. 466)
concluded that “in men (at least) empathic responses are shaped by valuation of other people’s social behaviour,
such that they empathize with fair opponents while favoring the physical punishment of unfair opponents”.
In the next subsection we present our hypotheses that are suggested by the literature that we just discussed.
2.2 Testable Hypotheses
Our first hypothesis is based on several studies that have shown that women are more likely to engage in
environmental behavior than men. Specifically, Mohai (1992), Olofsson and Oehman (2006) and Xiao and
Dunlap (2007) found that females demonstrated higher levels of environmental concern in surveys, while
Menges and Traub (2009); Czap and Czap (2010); Czap et al. (2012) reported that females contributed more to
the environment in incentivized experiments.
Hypothesis 1. Females behave more environmentally friendly than males.
Our second hypothesis is informed by the studies suggesting that females will be using environmental resources
with more care than males (Jackson, 1993; Manion, 2002; Martine & Villarreal, 1997; Westermann et al., 2005)
and that they tend to favor more informal relations (Agrawal, 2000; Molyneux, 2002; More, 1990; Riddell et al.,
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2001). This leads us to posit that in the cases where woman possess property rights we expect more sharing of
common resources.
Hypothesis 2. Females who own property rights share more with their group members than males.
The literature mostly agrees on the gender differences when it comes to empathy: studies using self-reported
empathy questionnaires (Davis, 1980; de Corte et al., 2007; O’Brien et al., 2013; Toussaint & Webb, 2005),
biological (Knickmeyer et al., 2006) and neural basis (Rueckert & Naybar, 2008; Singer et al., 2006;
Schulte-Ruther et al., 2008) demonstrated that females experience higher empathetic response than males. This
leads us to hypothesize that females will be more prone to have a stronger emotional reaction on empathy
nudging which in turn will cause them to change their behavior:
Hypothesis 3. Empathy nudging is more effective in moving individuals towards more environmentally friendly
and sharing behavior when it is done to females than to males.
Males (but not females) have been shown to consider punishment of unfair players to be rewarding (Singer et al.,
2006). In everyday life we also observe a predominant role of men in the development and support of law
enforcement and the justice system, which suggests that the punishment of norm violation could be more
effective when applied to males rather than females, leading to the following:
Hypothesis 4. Fines are more effective in moving individuals towards more environmentally friendly and sharing
behavior when imposed on males than on females.
3. Experimental Design and Procedures
3.1 Experimental Conditions in the Downstream Water Pollution Game
3.1.1 UF Is PRO–No Feedback
We used a framed laboratory experiment representing a downstream water pollution situation. There are two
players: Upstream Farmer (UF) and Downstream Water User (DWU). UF is an agricultural operator who has
500 acres of farming land upstream. UF owns the property rights (PRO) and thus can decide how much land out
of 500 acres will be placed under Conservation Tillage (CT), with the corresponding pollution. CT is a relatively
less harmful tilling practice as compared to intensive tillage due to land being disturbed minimally. CT leads to
lower chemical runoff, less soil erosion and as a result higher drinking water quality in the rivers and lakes
downstream. At the same time, CT is perceived as a more costly farming practice than intensive tillage due to
less certainty regarding planting dates and higher risks. DWU is an individual who gets drinking water and uses
water for recreational purposes from the river or the lake downstream. The payoff of DWU is therefore affected
by the choice of CT by UF.
The game consists of three stages. During Stage 1 Upstream Farmer decides how much of farming land will be
placed under Conservation Tillage. The rest of the land is assumed to be under intensive tillage. Depending on
the chosen CT, UF and DWU get different initial payoffs (Table 1). Note, that the socially optimal (yielding the
highest total payoff for both players) level of CT is 300, while the lowest level of water pollution will occur
when CT=500. This implies an inherent tradeoff between economic (the individual and group profit) and
environmental considerations.
Table 1. Initial payoff distribution
Level of CT out of 500 UF’s payoff, tokens DWU’s payoff, tokens Total payoff (not displayed to players)
0 1500 300 1800
100 1300 700 2000
200 1100 1100 2200
300 900 1500 2400
400 700 1600 2300
500 500 1700 2200
During Stage 2 UF may choose to transfer some portion of DWU’s payoff to self as a compensation for any
reduction in payoff due to CT above 0. The maximum amount that can be transferred depends on the relative
payoffs of the two players, but after the transfer the payoff of DWU cannot be below 300 tokens. The payoff can
be transferred only one way–from DWU to UF. After the transfer, the final payoffs are calculated.
During Stage 3 the chosen level of CT, the transfer, and the final payoffs are displayed to both players. This
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short essay “Arguments in Favor of Private Property Rights in the Context of Water Pollution” which was based
on Bromley’s (1989) five arguments, including first occupancy, labor, utility, political liberty, and moral &
ethical grounds. After reading the essay the participants had to answer 7 multiple choice questions on the
readings. Based on the scores the top 50% of the participants in each session earned the role of property rights
owner (ties were broken by the time it took a participant to complete the quiz).
3.3 Procedures and Subjects
The experiment was designed and administered using the economics experimental software z-Tree (Fischbacher,
2007). It was conducted in the Experimental and Behavioral Economics Laboratory at the University of
Nebraska-Lincoln. The participant’s decisions during the experiment were tracked using a 5-digit random
number to assure anonymity. After the subjects completed the PRO activity they received information on their
performance. Following the instructions the experimenter answered questions and the participants were asked to
take a quiz. The quiz tested their understanding of the institutions and the ability to calculate the payoffs
correctly (the subjects were not allowed to proceed until they submitted the correct answers). The game was
played for two rounds which allowed us to measure the distribution of the payoffs before and after the feedback
(if the feedback was applied). After the participants completed the experiment they were paid privately their
experiment earnings in cash. The mean earnings were $45.16 (standard deviation $9.79), while the opportunity
costs (average reported hourly wage) were $9.73 (Note 3).
In total 432 subjects participated in six conditions, which were run in 33 sessions, each 60–90 minutes long. In
all of the experimental conditions there was an almost equal split of the participants by gender (Table 2). A third
of the subjects grew up in mostly rural areas and over one quarter of the subjects have farmers in their families
which makes them quite familiar with the context of the study.
Table 2. Descriptive statistics of the participants’ demographics
Variable Characteristic
Gender 51% females (45, 56, 50, 52, 48, & 55% in the respective 6 conditions)
Age Average 29; range 19-85 years
Grew up in rural area 33%
Have farmer(s) in family 77%
Total number of subjects 432
4. Experimental Results and Discussion
4.1 Environmental and Sharing Behavior Depending on the Property Rights Ownership
There is no consistent pattern (Table 3) in the choices of conservation tillage by female and male-property rights
owners: 3 of the differences are positive, 2 are negative. In only one condition, DWU is PRO–Imposing Fine, the
difference is significant (Wilcoxon rank sum test, p-value = 0.02), which means that females chose a lower level
of pollution, i.e. higher conservation tillage, which resulted in higher water quality downstream. Overall, men
exhibited more uniformity in their choices, as presented by a lower standard deviation, than women. Notably,
both females and males are choosing above the social optimum of 300 acres, suggesting that they do not go for
the highest economic payoff. At the same time, they are very far below the environmental optimum of 500 acres.
This leads us to reject Hypothesis 1 and note the following:
Finding 1. Under the threat of fine female water users (but not farmers) behave more environmentally friendly
than males.
In terms of sharing behavior female property right owners were more likely to allocate a higher share of payoff
to their group members (Table 3) which is evident by the negative difference in 5 out of 6 cases between what
females allocated to themselves (e.g., 54% in the DWU is PRO–Inducing Empathy condition) versus what males
allocated (58% in the same condition). The differences between the average shares are not significant except in the
DWU is PRO – Inducing Empathy condition (Wilcoxon rank sum test, p-value = 0.09). This leads us to reject
Hypothesis 2 and state the following:
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Table 3. Decisions of property rights owners in round 1
Average by condition PRO is female PRO is male Difference Difference is significant?
Conservation Tillage, max 500 acres
UF is PRO – No Feedback 373 344 + No
DWU is PRO – No Feedback 325 388 - No
UF is PRO – Inducing Empathy 282 317 - No
DWU is PRO – Inducing Empathy 348 348 0 No
UF is PRO – Imposing Fine 330 290 + No
DWU is PRO – Imposing Fine 355 315 + Yes, p-value = 0.024
Share of PRO payoff
UF is PRO – No Feedback 0.641 0.642 - No
DWU is PRO – No Feedback 0.505 0.578 - No
UF is PRO – Inducing Empathy 0.644 0.679 - No
DWU is PRO – Inducing Empathy 0.540 0.580 - Yes, p-value = 0.088
UF is PRO – Imposing Fine 0.577 0.644 - No
DWU is PRO – Imposing Fine 0.521 0.510 + No
Finding 2. In the induced empathy situation female water users (but not farmers) share more than males with
their group members.
Taking together these findings suggest that the effect of fines and empathy nudging depends on whether females
are making a decision from the position of a farmer (polluter) or a water user (victim). As a polluter, both
genders decide similarly. If the victim is the property rights owner, however, gender differences can be observed.
Intriguingly, the fine and empathy nudging affect different dimensions of behavior: the threat of fine decreases
the level of pollution chosen by women, while empathy nudging increases the level of sharing.
4.2 Effectiveness of Empathy Nudging and Fines
Empathy nudging by sending emotional feedback in the form of an emoticon was applied in 33% of the cases.
Overall male property right owners were receiving such feedback more often than females, which is probably
driven by the more generous behavior of female-PROs in Round 1 (since the conservation levels by male-PROs
were overall higher in the Inducing Empathy conditions). In particular, 12 out of 40 females-PROs received at
least one and 17 out of 48 males received at least one . Men were more likely than women to receive one
frowney, while women were more likely than men to receive two frowneys (Figure 2).
In order to evaluate the effectiveness of inducing empathy we constructed a regression using gender as a dummy
and controlling for whether the property rights owner is an upstream farmer or a downstream water user (Table
4). In these regressions we considered only cases when an emoticon was sent. The dependent variable in
Model 1 is the absolute change in the level of conservation tillage in Round 2 as compared to Round 1. The
results of Model 1 support our Hypothesis 3 that empathy nudging is more effective for females than for males
when one is trying to increase environmentally friendly behavior: the coefficient in front of dummy
Gender=Female is positive and statistically significant at 5%. This coefficient is also economically significant –
a female receiving a frowney increases CT by about 10% of the Round 1 CT averages.
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Figure 2. Empathy nudging received, by gender of the property right owner
In addition, empathy nudging tends to be more effective for females as compared to males when it comes to
decreasing the share of payoff that the property rights owner allocated to him/herself (Model 2 in Table 4). The
coefficient in front of dummy Gender=Female is negative, albeit, with a p-value of 0.11, just insignificant at
standard levels.
Finding 3: Empathy nudging of females is more effective in moving individuals towards more environmentally
friendly and sharing behavior (supporting Hypothesis 3).
Table 4. Empathy nudging: regressions for changes in Round 2 as compared to round 1
Conditions and variables Model 1 Model 2
DV: change in conservation tillage, max 500 acres
Intercept -19.71**
Dummy for Gender (Female=1, Male=0) 28.37**
Dummy for PRO (UF is PRO=1, DWU is PRO=0) 16.72
R2 0.09
DV: change in share of PRO payoff
Intercept -0.003
Dummy for Gender (Female=1, Male=0) -0.039†
Dummy for PRO (UF is PRO=1, DWU is PRO=0) -0.020
R2 0.11
Significance: † p-value = 0.107; ** p-value <0.05.
We also found that empathy nudging decreases the proportion of payoff allocated by the PRO to themselves
(-0.05 percentage points, p-value=0.0135) (Note 4), thus increasing payoff sharing, however it does not
significantly increase conservation levels.
As compared to emotional feedback, fines were applied a little bit more reluctantly – monetary punishment was
imposed in 29.5% of the cases. Similarly to the Inducing Empathy conditions, overall male property right owners
received fines more often than females in the Imposing Fine conditions, which is driven by both more sharing
and higher conservation levels that were chosen by female-PROs. In particular, 11 out of 42 females-PROs
received at least one fine and 15 out of 46 males received at least one fine. Men were much more likely than
women to receive two fines (Figure 3).
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Frowney for CT Frowney for share Frowney for both None
Proportion of PROs
PRO is male PRO is female
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Figure 3. Fines received, by gender of the property right owner
In order to evaluate the effectiveness of imposing a fine we constructed regressions using gender as a dummy
and controlling for whether the property rights owner is an upstream farmer or a downstream water user
(Table 5). The dependent variable in Model 3 is the absolute change in the level of conservation tillage in
Round 2 as compared to Round 1, the dependent variable in Model 4 is the absolute change in the share of the
payoff allocated by the PRO to themselves. We found no support for our Hypothesis 4 that fines are more
effective for males than for females (none of the regression coefficients are statistically significant at 10%).
Finding 4: Fines imposed on property rights owners have no statistically significant different effect on females
compared to males, both in terms of conservation levels and payoff sharing.
Table 5. Imposing fine: regressions for changes in round 2 as compared to round 1
Conditions and variables Model 3 Model 4
DV: change in conservation tillage, max 500 acres
Intercept -4.59
Dummy for Gender (Female=1, Male=0) -9.61
Dummy for PRO (UF is PRO=1, DWU is PRO=0) 3.30
R2 0.01
DV: change in share of PRO payoff
Intercept -0.005
Dummy for Gender (Female=1, Male=0) -0.052
Dummy for PRO (UF is PRO=1, DWU is PRO=0) 0.066
R2 0.12
Significance: p-value >0.10.
Moreover we found that fines actually have a counterproductive effect by decreasing the levels of conservation
(by 40.96 acres, p-value = 0.075) (Note 5). They do not, however, affect sharing behavior. Coupled with our
previous finding we can offer the following observation which warrants further research:
Observation: Imposing monetary fines is counterproductive and decreases environmentally friendly behavior
(however it does not significantly affect sharing), while empathy nudging increases sharing behavior (however it
does not significantly affect environmentally friendly behavior).
5. Conclusion
Generally, we find that imposing monetary fines is counterproductive as it decreases environmentally friendly
behavior. From a neoclassical economic perspective this is a very surprising result as fines are supposed to
increase the perceived cost of behaving in an environmentally damaging way, and therefore should increase
environmentally friendly behavior rather than decrease it. From a behavioral economics perspective there are
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Fine for CT Fine for share Fine for both None
Proportion of PROs
PRO is male PRO is female
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20
two possible explanations for this behavior. The first explanation is based on revenge as a driving force of
behavior. Subjects do not like being fined or punished and rather than behaving in a rational way, they instead try
to take revenge. The second explanation is based on intrinsic versus extrinsic motivation. Whereas subjects
might be intrinsically motivated to protect the environment or do the socially right thing, getting a monetary fine
may shift the focus onto the purely pecuniary dimension (see Gneezy & Rustichini, 2000a, 2000b; Czap et al.,
2013 for similar findings) and hence may cause subjects to disregard the environmental impacts of their
decisions. This finding has important policy implications, as much of the current environmental policy is based
on command and control approaches. Imposing fines is not an effective policy!
Interestingly, the same cannot be said about threatening to impose a fine. Here is where heterogeneity becomes
an important consideration. Females are much more susceptible to the threat of monetary fines and behave,
compared to males, more environmentally friendly as a result of such a threat as long as they are in the position
of a downstream water user. Furthermore, the results in this paper suggest that females are also more
significantly affected by potential social disapproval (the induced empathy situation) and actual empathy
nudging than their male counterparts.
From an environmental economic perspective with focus on less developed countries this provides good news as
well as bad news. The bad news is that males are neither very responsive to fines nor to empathy nudging. If
anything, the effect of fines will be counterproductive. Since the vast majority to economic assets is owned and
controlled, or managed, by males, this implies significant challenges for an environmentally sustainable
development strategy. The good news is that the results in this paper support that females are relatively
responsive to policy designs meant to enhance environmentally conscious behavior. This provides another
argument for increasing gender equality that is based on environmentally sustainable economic development and
thus may strengthen the push by national governments as well as international organizations to increase the
economic role of women.
Acknowledgements
This research was funded through the USDA NIFA Policy Research Centers Grant Program. We want to thank
Stephanie Kennedy and Shannon Moncure for help in administering the experiment and Darin Dolberg for
computer support.
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Notes
Note 1. www.census.gov accessed December 25, 2013.
Note 2. The subjects were informed that performance and the speed of the quiz completion will determine how
much control over their decisions they will have during the experiment.
Note 3. The participant’s earnings in this experiment are consistent with the incentive payments in other similar
recent studies (e.g., Cubitt et al., 2011; Duffy & Kornienko, 2010).
Note 4. For the detailed regression results please contact the authors.
Note 5. For the detailed regression results please contact the authors.
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