Considering the renewed debate surrounding the relevance of climate change, it seems almost tragicomical that few actors are willing to allow some degree of dispassionate distance to develop strategies that are actually helpful. After all: this is possible.
In an increasingly complex world which makes it difficult for the human mind to find its way around, simple proposals for solving complicated problems become increasingly attractive. This comes as no surprise to anyone who has ever been concerned with how people perceive the world and base their decisions on this perception.
In the 1970s, psychologists Daniel Kahneman and Amos Tversky developed a theory that tries to explain how people decide in situations that involve a certain risk for themselves and for which the outcome is not obvious. In 1979, these considerations finally led to the paper “Prospect Theory: An Analysis of Decision under Risk”[1] – a work that to this day is one of the most influential in economics and which has provided the foundation for the new research field of behavioural economics.
Before Kahneman and Tversky, economic models were dominated by the view that people were always able to make rational decisions to their advantage. This kind of person is usually referred to as homo economicus. While scientific psychology at this time had long been aware that people were anything but brutally calculating, always rationally deciding actors, this insight did not yet seem to have reached the economists of that time. But the pioneering work carried out by Tversky and Kahneman and later continued by Richard Thaler, Cass Sunstein and others was soon undeniable. The credo of the always rationally deciding individual began to crumble faster and faster. Consequently, Kahneman received the Nobel Prize in Economics in 2002 and Thaler in 2017 for their research. The work on decision-making processes led to two central aspects that are important for understanding the public perception of climate change.
Less is not always more
One of these basic assumptions is described as “loss aversion” – in other words, the tendency to be more anxious to avoid losses than to make profits of comparable value. A concrete example: For the personal perception, the loss of satisfaction when losing 100€ weighs more than the gain in satisfaction when the same amount occurs as an unexpected windfall. The emotional evaluation of the loss-profit calculation therefore shows an asymmetry in favour of avoidance behaviour. Closely connected with the term loss aversion is the so-called “endowment effect”. According to this, people attribute a higher value to those things they perceive as their property than to foreign objects of similar value. Kahneman, Knetsch and Thaler (1990)[2] considered that loss aversion offers a possible explanation for the often observed endowment effect.
If one takes this idea as a starting point, it comes as little surprise that many people are repelled by the often communicated restrictions in their personal lifestyles that are demanded for the prevention of climate change. While climate change is an abstract phenomenon that is emotionally difficult to comprehend, the required renunciation of meat, air travel or children reveals itself as a concretely perceived loss of quality of life. Apparently objective projections that calculate price adjustments for many amenities – measures that are supposed to be necessary to reduce consumption and thus its impact on climate – understandably cause rejection and anger among many people. It is among the great tragedies of political ideologies that they have to work with the people they have, not those they seek.
The widespread call for more renunciation, more taxes and more restrictions will therefore only be met by those who are already willing to accept personal losses in favour of a superior idea. In many cases this is due to the fact that they do not perceive the recommended restrictions as such at all, as they already follow the proposals themselves voluntarily. However, assuming that all other people are just as willing to change their own lives is too short-sighted.
Strategies are needed that recognize that different people have diverse needs and that a “one-size-fits-all solution” will only work in the manifestos of revolutionary ideologists. Much would already have been done for public perception if there were no longer so much talk about what we must sacrifice, but what we can actively do without compromising the perceived quality of life.
In Germany, for example, one of the good news in recent history has been the idea initiated by the state of Schleswig-Holstein and the cartoonist Ralph Ruthe to plant trees or donate money for the Day of German Unity – without any coercion or scaremongering. The positive response was accordingly high. Presumably it would have looked differently if the introduction of a “tree tax” had been considered, which would be used for the same purpose, but without providing the public with a decision-making option.
The idea behind this is not new. Richard Thaler and Cass Sunstein popularized the concept of the so-called “Nudge”[3], which they also refer to as “libertarian paternalism”, with their same-named book in 2008. One of the basic assumptions is that it often makes sense to increase the number of possible options and to present certain positive alternatives in a way that makes them more obvious to the user. For example, instead of banning fast food in canteens, healthier offers are set up in a place perceived as more accessible. Every customer still has the freedom to decide whether or not to order a burger with fries on his plate, but from now on he may consider more often that a vegetarian alternative is occasionally not completely wrong. Private companies have been familiar with this type of customer influence for years and exploit it wherever possible.
The question therefore arises why political actors too often resort to fear as a motivator instead of looking for ways to provide people with more options to act or at least make them more aware of them. Because in many cases it is not so much the intensive search for a panacea as the focus on already existing possibilities that is needed. Instead of pointing out on Earth Day that the resources for the current year have theoretically been used up and that we all, once again, have to renounce, abstain, abandon, it would be much smarter in terms of communication theory to show the amount of electricity costs a private household can save through simple methods. The goal and the result are the same, but the way is completely different.
Climate change, shmimate change
Many people are annoyed with the debate about climate change. They think it’s all just a big media hysteria and Greta, Fridays for Future and others have no idea what they’re talking about. And anyway, there have always been warm and cold phases on earth.
These thoughts exist and it is important to take them seriously. A sweeping condemnation with the indication that such people are just some right-wing conservative conspiracy types after all, is not very effective.
Instead, it is worth considering the second basic assumption of behavioural economics: a dichotomy that Kahneman describes as “System 1” and “System 2”[4].
System 1 is the unconscious, intuitive mechanism that reacts quickly, automatically and emotionally and provides the basis for most everyday decisions. It would be extremely impractical for people to consciously think about every decision because life as we know it would probably be impossible. However, we should not identify System 2 as the actual decision maker. This second, logically calculating, consciously thinking system gives us the illusion that we are always master of all things and, of course, can always make rational decisions that benefit us. It is not surprising that the idea of homo economicus survived for so long. We often perceive it as our reality of life, simply because we lack knowledge of the unconscious processes that determine our own existence.
The reason why nudging can often be a useful approach to promoting desired behaviors is due to the fact that our system 1 makes many of the decisions influenceable by it. Climate change, however, which takes place as an abstract, perceived distant phenomena somewhere beyond our reality, is more accessible to the more cumbersome System 2, and only if the arguments presented are convincing and do not confront the perception of System 1 too much. Who has the time and motivation to deal with technical discussions on climate theory? This should not be understood as a criticism, but as a simple representation of the status quo as it presents itself to many people. It is completely normal that we often try to avoid stressful situations when it doesn’t seem necessary.
So should we just slap our hands above our heads, because there is no point in anything anyway and nobody really knows what he is talking about? Not quite.
Black swans and complex systems
In 2007 the statistician Nassim Nicholas Taleb published the book The Black Swan: The Impact of the Highly Improbable[5]. One of the book’s key messages is that human life and the ecosystem that surrounds it is an unbelievably complex system of countless variables that we cannot possibly all include in the assessment of the world. Hence: There is a possibility that events will occur that contradict all statistical predictions but sometimes have catastrophic consequences – the eponymous Black Swans. It is part of the irony of history that one year later an unexpected world economic crisis had very disastrous consequences in many countries – hardly anyone had expected such a far-reaching event at the time. The forecasting models used did not indicate anything. This does not mean that statistical methods are useless, quite the opposite. There are many areas in which statistical observations can be very helpful. However, it is no less important to occasionally consider the limitations of these methods and understand what can be reasonably predicted and what cannot.
According to Taleb, climate models belong in the latter category. Since it is impossible to know all relevant factors, derived forecasts based on incomplete information are also relatively worthless. Interestingly, this consideration does not lead him to the same conclusion as many critical commentators writing below the articles of numerous climate change reports.
Following his reasoning, it is absolutely necessary to be as conservative (in the literal sense of the word, meaning “preserving”) as possible with regard to environmental aspects. The possibility of a catastrophic Black Swan event exists and its effects can be so devastating that we will never recover. So even if all the models and predictions are useless (a position about which there is likely to be a good deal of controversy), it is precisely this uncertainty that makes risk-avoiding behaviour very reasonable.
One does not have to share Taleb’s rigorous rejection of statistical forecasts in complex systems to recognize the attractiveness of the argument. Sometimes it doesn’t take complicated mathematical procedures to admit that you don’t understand most things, but it may be a good idea to reduce the risk of a devastating event.
Hopefully, public discourse will shift in favour of a positive, less fear-centered debate. Instead of insisting on more and more prohibitions, restrictions and taxes, thinking about more attractive alternatives would be a very welcome change. Nobody will benefit from rejecting the major global issues of our time because we have failed to adequately illustrate their significance. Most people do not like to feel that their freedom of choice is being restricted. That is normal, that is human. We therefore need more good options, not less.
Sources
[1] Kahneman, D. & Tversky, A. (1979). “Prospect Theory: An Analysis of Decision under Risk”. Econometrica. 47 (4): 263–29
[2] Kahneman, D.; Knetsch, J.; Thaler, R. (1990). “Experimental Test of the endowment effect and the Coase Theorem”. Journal of Political Economy. 98 (6): 1325–1348.
[3] Thaler, Richard H.; Sunstein, Cass R. (2008). Nudge: Improving Decisions about Health, Wealth, and Happiness. Yale University Press
[4] Daniel Kahneman (October 25, 2011). Thinking, Fast and Slow. Macmillan.
[5] Taleb, Nassim Nicholas (2007), The Black Swan: The Impact of the Highly Improbable, Random House
