Applications of Behavioral Economics to Climate Change

Kent D. Messer, Diya Ganguly, Lusi Xie

As with most environmental challenges, problems associated with climate change are largely the result of human behavior that is intricately embedded in our daily actions and lifestyles and part of societal and cultural norms. Thus, mitigating and adapting to climate change require changing human behavior and practices. A burgeoning literature has addressed ways in which olicymakers can tap into insights derived from behavioral economics to overcome these challenges. In this article, we identify policy-relevant interventions that have been analyzed in
the peer-reviewed literature. The studies have addressed everything from one-time changes in behavior to larger-scale societal changes sustained over time. This literature review summarizes the key findings in a series of write-ups and corresponding tables in which we report on the studies in terms of five core principles of behavioral economics: (1) limited attention and cognition, (2) present bias, (3) reference dependence, (4) social preferences and social norms, and (5) incorrect beliefs. These core principles are then applied to four key policy areas related to climate change: (1) energy use and efficiency; (2) transportation; (3) consumption, reduction, recycling, and reuse; and (4) land use decisions.

Dissertation: Essays on Conservation outcomes on Rented Farmland – Role of Gender

Diya Ganguly, Simanti Banerjee, Christopher R. Gustafson


The essays in this dissertation explore why female landowners may be less likely than male landowners to achieve long term conservation on their land. In Chapter 1 we develop theory to model the strategic interaction between a landowner and a tenant with a focus on their gender and implementation of conservation practices on land. Within the context of a sequential-move game, we use the principal-agent framework and identity theory to model land-use choice and equilibrium payoffs between landowner and tenant. We consider cash rent lease and discounted lease whereby the tenant pays a reduced rent if they implement conservation practices on the leased land. Our model predicts that for tenants with low valuation for the environment, prescription within a rental contract yields social identity losses that overwhelm their benefits from conservation, leading them to ignore the female landowner’s request. Therefore, the landowner must give rental discounts to the tenant to incentivize conservation. In a similar situation, male landowners can prescribe in a traditional rental set up as they undergo no social identity losses. This outcome suggests that ecosystem services benefits may be underprovided due to gender norms. In the second essay we adapt the model from Chapter 1 to design an experiment that analyzes the tenant’s choice to conserve under three types of leasing agreements – fixed rent, fixed rent with penalty and with discount, when gender of the landowners and identity norms are salient. We then use the analysis to design a controlled lab experiment in which we vary the gender of the landowner, communication opportunities and gender priming conditions. Findings indicate that male tenants do choose to conserve more for male landowners compared to female landowners. However, our conjecture about women offering more discounted rental contracts does not hold. Compared to male landowners, women landowners chose to offer more fixed rent contracts that offered neither penalty nor discount to the male tenants. Moreover, we find that male landowners offered higher discounts than women.