Curbing Carbon: An Experiment on Uncertainty and Information about CO2 emissions
-
Series
-
SpeakerDavide Pace (University of Amsterdam)
-
FieldSpatial Economics
-
LocationOnline
-
Date and time
October 15, 2020
14:00 - 14:40
We investigate how consumers respond to uncertainty about CO2
emission size. In an incentivized online experiment, participants can acquire a
valuable good that emits an unknown amount of CO
2. We find that
beliefs about emission size are strongly predictive of purchases, even
exceeding the effect of substantial changes in the price of the good. Moreover,
information that makes beliefs more precise causes a 26% reduction in overall
emissions, even though average beliefs are unchanged. The reduction occurs as
the marginal willingness to pay for emission reduction declines with emission
size, so people who are too optimistic about emissions are more responsive to
information. We also test for the formation of self-serving beliefs. Contrary
to theories of motivated reasoning, increasing the surplus from buying the
product does not change patterns of attention or belief formation about
emissions. Overall, the results suggest that information about CO
2
impact can be an important policy lever, and that willingness-to-pay for
emission reductions should take into account the size of emissions. Joint paper with Joël
van der Weele.