 everybody welcome right okay so I'm Taylor I direct the gun I'm a professor Rubenstein and welcoming Francisco is a great pleasure to campus he works at Katie which is a research institute essentially around sustainable agriculture biodiversity forestry in Costa Rica serving all of Latin America kind of like a land grant university does so he directs the research program for that whole place he's also as appointed as an associate professor at University of Glutenberg and Sweden and he's essentially an environmental and behavioral economist but also a real leader in sort of part private and public management of natural resources from all sorts of angles not just economic ones specializes in everything from national policy to individual behaviors and how we can understand and use those to better manage natural resources he's a really big thinker about sustainability broadly in the author of a lot of papers that have had a lot of influence so that's sort of the basic professional thing it's also personally a great pleasure because Francisco is my host when I was on sabbatical last year so I visited his institution for ten months and he was the host there and now I get to reciprocate for like six days here in Vermont and a very very different climate as you might imagine while we're on sabbatical we started two research projects together we're in the middle of proposing a third and we were talking about bringing UVM and the gun institute into a couple of the international consortia and networks that Francisco helps to lead so during that sabbatical Francisco made time to go to lunch with me every week at this kind of diner down the road from the Institute and so I got to know him personally really well too he's a delightful person to talk with collaborate with hang out with a really thoughtful leader and a pleasure to have here visiting us in Vermont so please help me in welcoming Francisco Apisar thank you Taylor for those those very kind words my voice sounds strange from here is it strange also on the mic okay now it's better for me to okay so I'm very honored to be here I really wanted to be here proof of that is that I just spent four days coming here between Costa Rica I left on Saturday morning and I arrived yesterday night it's been a long journey but one that I really wanted because I've been talking to Taylor for such a long time and the good institute has been on my radar for a long time and it's really something that has so many synergies to work that with the work that we do in Central America it has so many synergies with these environment for development initiative that we can talk a little bit more later if you want so I think it's a marriage made in heaven for many reasons and I'm very excited to pursue those with a visit here and many potentially to come so today I'm going to talk about behavioral insights for the design of environmental policies and environmental economists but most of my work has been on behavioral economics doing experiments and conceptualizing the role that micro decisions have on environmental problems in this talk in particular I'm going to try to argue that these insights although they are very although we studied them at the individual level they have something to say at the larger scale and I'm going to be talking about large scale collective actions and I'm going to define what I mean by that too so what is the rationale basically each day we make this millions and millions of tiny decisions from turning up the lights putting the heating or the air conditioning in my case higher up and all those tiny decisions eventually have an enormous impact on the earth's resource space some of that impact is already having very big consequences and what you have there are the these nine planetary boundaries that ecologists have put forward three of them are on heavy red biodiversity phosphorus nitrogen nitrogen biodiversity laws and climate change in particular so and all those three are related again to tiny decisions that we make every day so in order to change our development path we need to change the way that humans make those decisions we need the behavioral change but we need change in social norms habits and so on and so forth and for that those things won't happen automatically we know that humans have this capacity to go directly towards trouble unless we somehow something makes us change that course and that's something typically is well-designed policies that change behaviors and what we want is to decouple economic growth and hopefully economic well-being these two things are different although we usually linked well-being to growth but we want to decouple that from the position of natural resources so far despite our technology despite our advances big part of the progress we have is at the expense of natural resources that the earth as a whole doesn't have and because I'm going to be talking about behavioral economics the key insight behind behavioral economics everything we know about behavioral economics can be summarized in that key insight which is that people make decisions by trading off you know sacrificing a little bit of this in favor of a little bit of this other and people make those trade-offs on multiple types of value and not just price and by saying that I'm already thinking that we need to deconstruct the idea of our more economic because we have into something that is more credible just to be on the same footing when it I'm an economist and I don't know how many of you are economists or if there are economists at all in the room but basically when we analyze human decision-making we think that that decision-making is rational that is selfish that is transitive that means that if a is better than b and b is better than c then a is also better than c that is time consistent so that our decisions can be traced back for example that transitivity that I just described is valid today as it was ten years ago as it will be ten years from now the other factor is that humans tend to be we believe they are risk averse we don't like risk but we measure risk using objective probabilities so for example the probability of having a six in a dice is one six that that is called objective probabilities the also the other assumption the last assumption is that we might much in my utility that I from consumption consumption of goods food and so on also luxury goods and so on and so forth now the real challenge in behavioral economics is to make that individual individual utility function much more credible but we shouldn't abandon the toolkit of economics we should just make it more credible and there is a lot of interest in making it more credible and from very powerful sources so I'm putting these reports for example this is a report by OECD looking at behavioral insights into public policy a very good summary this is the green growth knowledge platform this is report I was part of that report we just put it out looking at how behavior changing behavior is a prerequisite for green growth and this is the World Bank the World Development Report mind society and behavior I think this is from 2015 so there's a lot of interest in this from for many reasons and I'm going to be talking about those reasons in this talk so what do we know a quick summary of what we know and I've tried to put this into three big pieces of information the first one is bounded rationality the second is bounded willpower and the third I've chosen to call it bounded individuality so what do I mean by bounded rationality that is that basically human problem problem solving is constrained by our cognitive abilities we have a limited cognitive abilities and sometimes we just don't use any of it for example sometimes we react to the frame and not to the information contained in a leaflet for example many human decisions are just determined by the way the information is presented if it has green colors or bright colors and so on we take a decision if it has sad colors we take another decision or if you ask people what is going to be the temperature in the average temperature in the month of say July but then we draw a number first and the number is on the high side then temperature is going to be higher in July and if you draw a smaller number they think the temperature is going to be lower in July and that is crazy in a way that sounds crazy but no it's just people people's mind being lazy and it's okay to be lazy in a way it could be very intelligent to save energy in those cognitive processes the other finding that comes by this time when I say finding is sort of this sort of systematic findings that that papers produce one and over and over again is that individuals are more likely to avoid a loss than to pursue a game this is linked to the fact that people typically use subjective probabilities and not objective probabilities so for example I'm Costa Rican and I did a study looking at loss aversion and whether people use actually subjective versus objective probabilities and we found that Costa Ricans are very loss averse but at the same time they're very optimistic so if you if you tell them there are four possible outcomes with eco probabilities from a very bad outcome to a really good outcome you just told them the equal probabilities 25% each when you see their decision-making processes you see that they are disregarding those objective probabilities and thinking the you know waiting up the probabilities of the good outcomes and that's very Costa Rican we think everything is going to be fine so even when we talk 25% now that everything is going to be fine for some divine purpose and that's very very typical there are some societies where you observe exactly the opposite either way this leads to inaction many choices what we believe our choices are not really choices there are automatic responses for example the default alternative that's one of the strongest findings in behavioral economics the fact that people just could go on with the default alternative in their computer in their air conditioning in their cars and so on and so forth the last point and and I think this is a particularly important one is that typically we do not spend a lot of energy making decisions so judgment is influenced by whatever first comes to mind and this is okay for day-to-day problems but when it comes to more complex problems that can lead to very inefficient solutions just this Friday I was talking to the to the Minister of Environment or a team of people that are dealing with transportation problems and we have a lot of congestion a lot of pollution a big concern with decarbonization of the Costa Rican economy and what do you think was their solution let's put a big tax on big cars I'm like well what sort of big cars no no just big cars people should not be allowed to buy a new big car and I'm like wait wait that's a very so what if they buy a one-year-old car yeah it's taxed that too so new cars and cars that are one-year-old and if their motor is very big we're going to tax that and I'm like okay well what about two years oh yeah yeah because if we tax new cars and cars that are one-year-old that people are going to buy cars that are two years old right yeah yeah so we taxed two one and new cars well what about three and what some people are you not realizing that you're making a wrong assessment oh yeah maybe we should think a little bit more about this so there there is a conversation that was leading or a decision-making process that was just you know shooting from the hip and not really doing a proper assessment of the information when it comes to bounded willpower the the second group of findings I want to start with this short-sighted choices people make very short-sighted choices for example acquiring credit card debt oh let's go to the mall let's spend this this money that we don't have but then again you know because that information is provided to you that you are going to pay this in the couple of months right so this is a short-sighted choice that that appears obviously contradictory also we use different discount rates depending on when the consequences of our actions will happen so if that bank for example with the credit card tells you well but you don't have to pay next month you can instead of 30 days to pay your card I'm gonna give you 45 yeah let's go to the mall it's the same right it's the same discounting problem and you're just you know making a mistake you are this is called my appeal of intertemporal choices what is the implications of this too little investment low saving rates high debt but also simpler problems like overeating getting drunk you you get drunk tonight you're gonna suffer tomorrow and probably after in my case but this is a choice that appears contradictory smoking is another example of that the other problem is this cognitive dissonance there is some somehow like a mismatch between the things that we believe and the things that we actually do so our actions seem to violate transitivity so for example that phrase I'm going to stop procrastinating soon is a violation of transitivity in itself or this cigarettes are killing me if you know that then you should stop but the fact that you have there the are there your that is a violation of transitivity or or we should be recycling at home no it's not like should if recycling you consider it to be good you should be recycling already at home all all these junk food is going to give me a heart attack yes it's going to give you a heart attack because you're not gonna change it because your actions are violating transitivity and finally bounded individuality this is something that appears or at the start of this most of the papers were showing good things about the fact that humans were always active or mostly acting as part of a group and not as individuals which remember that in economics we believed it was individual decision-making the the individuals were making the decision in from the perspective of the individual we know now that's not the case there's a strange noise and there is a things good things like altruism and fairness concerns that's true that's important of course but individuals are social creatures also when it comes to bad things for example eating shark fin soup no hundred thousands of sharks are being killed to to produce a ridiculous soup that is completely tasteless just because it's fashionable to eat shark fin soup and despite the efforts of many environmental organizations shark fin soup remains a problem today as maybe less so and I'll tell you why but it's still a problem today so although you have good things like dog lovers you know when you when you have when people are dog lovers they really dedicate themselves to the dog but then that creates a sort of good environment and people interact with each other with the dogs as the basis of that interaction it's a very nice community you also have negative communities for example like the far shark fin soup now the next question that we need to ask is okay well yes this is all very nice but why do we really need to fix these things are and are these things part of the human decision-making as it is and the answer is that this behavioral falls lead to inefficiencies inefficiencies just as market failures do so there are many classical examples in which the government has intervened to force us to correct a behavioral fault for example compulsory seatboats or indoor smoking provisions and and if you're interested I urge you to to read that like camera at all paper called paternalism for conservatives because he basically develops the justification for intervening and in the presence of behavioral faults now why is this relevant to environmental problems well as I said at the beginning many of these environmental problems are caused by habits these are hard to change automatic choices and we need to somehow get in there and fix that decision-making process in order to avoid the laws associated to those choices we focus too much on the present we overlook long-term environmental impacts this is at the heart of environmental problems sustainability is also perceived as impersonal there is nothing I can do we want it but still do nothing so there's transitivity just as procrastinating with when it comes to stop eating junk food procrastinating when it comes to the environment appears to lead appears intransitive another case is as soon as something works we stop thinking so we stop we do not work our our mind stores optimal choices but we stop very quickly when we have a quick solution when it comes to environmental problems that is itself a problem then there are features of decision-making when it comes to the environment that are a little bit more particular to environmental setting for example humans tend not to notice some of the important features of the environment sometimes they're very hard and we have cognitive limitations explaining carrying capacity for example it might be very obvious for you because you're studying these things and so on but carrying capacity even biodiversity is or the role that biodiversity plays the role that a shark or a mosquito plays in the environment is something that is not easy to understand not easy to understand and the other one that I find very frequently is this knowledge acquisition biases if we think something is it relevant was it relevant in the past we believe it's going to be relevant in the future and we put it out of our decision-making process so I found farmers in in Central America we produce a lot of coffee we produce the best coffee actually and I found a lot of farmers suffering terribly from the seas called the coffee leaf rust and they basically said well but I've been doing that I've been doing this for years and years and years so so why should I change and use your optimized technological packages well this led to this disease yeah but I've had the disease in the past and so on and yeah but you know there's a new setting your temperatures are higher rain patterns have changed we know that they are going to change even better so if you continue using the information to the past you're going to suffer from more disease yeah but you know I'm too old to change in a way and behind this is this knowledge acquisition biases so what I what to say is that unless environmentally friendly choices become habitual automatic choices they will not be sustainable choices and I'm going to give you a few examples of how to make those choices sustainable a quick example about the nightmare of climate change if we describe climate change in very simple terms is caused by billions of tiny decisions that leads to big consequences but no nobody is really responsible it's impersonal we all suffer the consequences though and and this situation where our actions made us responsible but not really because such tiny responsibility it's very hard to understand we have it goes against our rationality cognitive limitations and if we start comparing each other yeah I need to worry about climate change with my neighbors but this huge SUV and they are on sale so I want one too and and he gets into our band bounded individuality it's also associated to a massive distribution of wealth climate change is going to affect us all but very differently depending on where we are in the income distribution and depending on which country we are and this is an ugly question when we when humans face these ugly questions typically we like to just push them under the rock it's too difficult to understand I'm just going to stop thinking about this the other problem and and it's related to this cost from solving the problem being lumped at the beginning so today but the damages of inaction are occurring in the future but I really want a good life now and probably you deserve all we all deserve a good life now to make things even more complicated there is this large uncertainty on what is the best solution what is the size of the damages in the future what if us technology comes and saves us all all these questions are there in the back of our mind when we when we just said now come on this is just too complicated I'm not going I'm humans are bad anyway making the temporal choices so we're going to say just drop the problem now climate change is is one of many large scale collective action dilemmas now I'm going to make the claim that behavioral insights are relevant for large-scale collective actions by large-scale collective action refers to the need to collectively solve solve this dilemmas these are a situation where where self-interest is in conflict with collective interest and there you have a few examples climate change depletion of the open open seas antibiotic resistance and many similar cute little things and this large-scale collective action dilemmas have four characteristics and this is an ongoing paper I have with it with a group of Swedish colleagues and these these are the four characteristics first there is a large number of actors meaning that there is a need for multiple layers of representativeness so when we are for example solving and I'm going to be giving you examples of small-scale collective action dilemmas because we know a lot about small-scale collective action dilemmas actually Eleanor Ostrom won the Nobel Prize on this small-scale collective action dilemmas I'm going to use small-scale collective action dilemmas to show how hard it is to solve this larger ones so in a small-scale collective action dilemma basically you as an individual represent yourself and your interest in the discussion and the conversation the community on how many sheep to bring to the pasture for example or how much water to draw from the aquifer and so on or how many trees to cut but when you have so many actors and that means that you cannot represent yourself you are represented by by somebody and that somebody probably is represented by somebody else and those lay those levels of aggregation mean that there are a lot of principal agent problems so that what what you want as an individual is hardly reflected on what is sort of negotiated at the proper scale second there's a lot of spatial distance between actors we feel very far away I mean a ton of carbon emitted in China a ton of carbon emitted in Argentina or in Russia or in Alaska is exactly they're identical one to the other so in principle we should worry about about that or ocean acidification or antibiotic resistance most of the antibiotic resistance we we are suffering now worldwide is not produced here in Vermont that you're suffering here in Vermont is not producing Vermont it comes from antibiotics being misused in India for example these places are very far away there's also temporal distances between the causes and their effects and and lastly these problems are scientifically complex it's not they're not easy to explain there are very complex feedbacks and interactions between all the the components of the problem so the proposition here is that large-scale collective action dilemmas can be tackled with instruments from behavioral sciences if and only if we have individuals worldwide relating to each other so if individuals somehow relate to each other if we share common values and norms and if there's a joint understanding of what needs to be done so a joint understanding of the technology and let me let me try to convince you about that so small decisions small decisions with respect to consumption and production have global consequences so this UND UNEP report states for example that household consumption accounts for at least 60% of the life cycle impact of consumption the key sectors behind that product life cycle is food housing transport and manufacturing so in particular food housing and transport these are all household decisions to a largest degree so are we really so many and so far away I'm going to claim that the global consumption patterns act as aggregators of our decision-making process they bring people together and they make us eventually and are more and more doing so they will make us share the same social norms they will help us create common values so for example if I show you this you know who this guy is right and what I'm talking about but if I were doing this talk in China they will also know or if I do this talk in Peru in Spanish they will also know they will actually be called hashtag me too even if it's in Spanish or in Chinese also communication and social media are bringing us together without Nate what Netflix is there but you know you all know what this is right we all listen to the same music to Spotify we all use Facebook and share friends worldwide we all use Instagram we look at the same movies listen to the same music and so on and so forth also there is a lot of reciprocity and social leaders that transcend borders this guy Yao Ming had this campaign join me and say no to shark in soup and with this campaign he's a very famous well you know this because you like basketball right Yao Ming's campaign diminished shark finning by about 50% after his campaign but that's a very successful campaign by by a good leader this guy maybe you don't know who this guy is because you don't play soccer here this is Ronaldo Cristiano Ronaldo one of the most famous football players soccer players in the world and he has no tattoos you know why because he advocates for donating blood and he successfully advocates for donating blood so it takes his shirt off both because his answer but also because he wants to show that he's done it's blood I want to think like that there are also very large conditional cooperation agreements this there's something called the Amsterdam Declaration of 2015 and there is a similar New York Declaration of 2014 that groups the biggest companies in Europe and the biggest companies in the US and they have signed a declaration by which they want to reduce deforestation in their value chains by 50% and by 2030 they want to have 100% deforestation commodity trading trading this is very powerful these are the biggest supermarket chains the biggest retailers at the large scale so there is a convergence of interest and lastly there's a joint technology push these two phones in the in the bottom they're identical for old they have the same button they look the same but one is a Samsung and the other is of iPhone there's a convergence of technology the world they now is converging to solar energy to solar powered cars and so on and so forth and this makes it easier for us as a global group to make decisions so back to what turns a social dilemma into a large-scale collective action dilemma these were the same characteristics but really we're many but we're not that different we share values we share norms we are also so close no matter how far we're also there's a lot of complexity in the problems we face but that complexity is not necessarily our hours to solve that complexity it can be simplified given the convergence of technologies we just need to adopt the right technology we do not understand why that we don't need to understand what that technology is the right one and this reduces the problem to temporal distance between causes and effect so I what I think we should be doing with behavioral economics is try to solve the intertemporal coordination problem the other ones we can tap tackle simply and to be honest I I don't know the solution I'm just putting it out there for you to produce some of those behavioral tools to actually tackle the intertemporal coordination problem the other three can be tackled with the knowledge we already have so this is I'm being real I don't have the solution so I think that's very exciting in a way because now we just simplify the problem to one coordination problem it's not a coordination of social norms is not that we we don't know what technology to target is not that we are too far away so that something that works in China will not work in the US and vice versa no we are all converging to the same social norms it is the intertemporal coordination that that needs to be solved now how can behavioral insights be used into policy design basically there are four big tools the first one is choice architecture second one peer comparison and so on let me walk one by one when it comes to the choice architecture we know very simple things these are concrete tools so simply simplify make information simple make it available like energy stars echo labeling all that helps make efficient decisions as a matter of habit for example efficient light bulbs work very well water conserving technologies they save on water irrespective of what you do at home that works very well the default alternative is also one of the most powerful tools we have found in behavioral economics just when you have clarity with respect to what the right technology is or what the right decision is just making that the fault and we will all happily move there without actually suffering too much from from the change the other one is carbon taxes and communication campaigns I know that in the US I shouldn't be talking about taxes but there is there are many countries that are trying to use taxes to reduce carbon and one of the strongest findings of all that literature is that more important than the site of the carbon tax is the communication campaign that follows the tax let me give you an example not for covered in Colombia they just passed a tax on plastic bags but say that the tax at Colombian pesos or have many zeros I don't want to go there because I don't even remember but let's say that the tax on plastics pack is 0 comma 0 0 0 0 0 0 0 0 5 so it's nothing but you are reminded at the cashier that plastic bags have a tax and people don't like taxes so they don't take plastic bags so although the tax is completely ridiculous in terms of size the effect has been enormous similarly with carbon taxes all you need is to push the tax forward and then follow with a very strong communication campaign and that would potentially work have a households compete to become green energy users for example this is something or green water users there is a very broad literature looking at that a lot of that literature coming from the US I have worked when it comes to combination of public rewards and punishments some of my work for Costa Rica shows that punishment is the way forward punish people when they misbehave but it could be the opposite in other countries right for example reward people if garbage is separated at the household punish them if not goal settings and commitment devices are also very powerful tools that the most obvious one that is used very frequently is tell your kids you're going to quit smoking for example you tell your kids you're going to quit smoking and you continue smoking then you're in trouble the for me the biggest behavioral insight and I say this working with governments in Latin America I've spent a lot of time working with governments and and they they are not beware of the response and I think the biggest behavioral insight is that individuals always and by that I mean always react to policies and rules sometimes they just ignore them sometimes they hate them sometimes they use it in the favor sometimes they use against someone else sometimes they of course they obey them or interpret them in different ways so the biggest behavioral insight is the most obvious obvious one for me beware of the response and I'm going to give you an interesting example of that soon some examples I'm working with global marine pollution with single-use plastics we and and we the question underlying this research is how can we build a social norm that takes away single-use plastics from our consumption basket a social norm basically is a predominant behavioral pattern and it's it's backed by an understanding of what is acceptable and what is not and is is after you have clarity about that you it's sustained through social interaction so basically let me put it like that a social norm is a predominant behavioral pattern for example we do not use single-use plastics is shared understanding of allowable actions for example in it's okay to use single-use plastics in medical use the gloves that doctors use or the syringe those are good single-use plastics we should continue that's allowable but a straw or fork and knife that's not allowable practices and then is sustained through social interactions are proven and disapproval that's basically the basis of a social norm and of course social norms are important because they help us coordinate around the core of the provision of a public good and the elimination of single-use plastics is possible only if we agree that we can do well without them so can we make rejection of single-use plastics a social norm how is that done of course you can tax the hell out of them but if not you can use laws you can use market-based instruments like rebates and deficit refund scheme you can have institutional commitment for example by big companies or you can have information and attitude campaigns like the one you have there stores will only be offered by request your mother thanks you and then there's a picture of the air that's a powerful information campaign there are social comparisons maybe you should all of the above above the ultimate intervention should be drawing bits and pieces from all those options another example is this terrible mosquito this disease is out they are all come from the same mosquito it's the as Egypt mosquito it it is very happy in urban environments very very happy wherever there is stagnant water the mosquito is around there in warmer climates that is that is gutters flower bases pot plants backyard garbage if water can be collected if clean water can be collected then the mosquito is there now the the only way of getting rid of these mosquitoes is eliminating the breeding grounds through physical removal take the water out of the of the pots or remove your garbage from the from the backyard and so on and so forth you can fumigate too but fumigation is just a distant second solution now I was working with the custodian government on this a long time ago and looking at the new law that deals with with this problem and they they have this recommendation let's find families with breeding grounds on their premises after inspection so there is going to be people from the minister of health visiting houses and if you have breeding grounds you will be fine so what do you think will happen well there is this paper by Nisi and Ruccini that basically they find that there's a kindergarten and parents were coming late and they thought oh let's find parents that come late so they could have fine and what do you think happened no even worse more parents start coming late because the fine was basically a price on time so well if I'm paying for it I might as well come late so the kindergarten said oh my god I made a mistake let's remove this do you think what what happened then parents continue to keep on coming late because now time was monetized and it was money making the decision it was not the social norm that was driving behavior so my uh what I would expect would happen in the case of custodian government is that I would wait for the uh minister of health officer to come to my house get it cleaned from mosquitos and then pay the the fine if there are any so this is like paying to get your house cleaned but because the ministry of health cannot have hundreds and hundreds or thousands of thousands of inspectors what do you think will happen an outburst of the disease and uh the real thing what we need to do is how continue to I believe is to continue working with social norms in support of the mosquito eradication and this is a big problem actually Taylor and I are thinking a lot on on how to create behavioral intervention with with this terrible mosquito but this finding families would I believe not work at all one final word when it comes to this and that is that nudging is not the same as behavioral policies there is a definition of the a notch is a part of the choice architecture that is that is change okay I'm almost done that is change in a predictable way so that you change behavior people people react to that without suffering consequences of that change for example having no salt in the table is a notch in Mexico for example because there was a lot of obesity problem and high pressure problems they they passed this regulation in which salt cannot be on the table because people were putting salt without even tasting the food that's a notch but prohibiting sugary drinks in schools that is not a notch that is intrusive into the decision-making process now nudging is only a subset of tools I'm not going to go into that but of course it has a huge potential so I want to stress though that nudging is just part of the decision tool of behavioral economics because I come from a developing country I would like to dedicate this last 10 minutes to what we know about behavioral insights in developing countries and the answer is almost nothing most of what we know comes from weird subjects these are western educated industrialized rich democrat subjects and why why do we expect differences let me give you a few examples first income level social norms and peer comparisons are very different between different countries so for example you can have hipsters competing to reduce energy or eating sustainable you know I'm vegetarian well I'm vegan type of thing in South Africa they did this study recently in which they they compare they use social comparisons aiming to reduce water consumption and they were very successful in reducing water consumption for the wealthier when you compare them to the average the wealthier household said oh my god I'm consuming a lot so they reduce their consumption but the poor households actually increase their consumption they see the average and said oh my god I'm consuming so much less than the average no I'm going to consume more I'm poor anyway so at least in one way I should not be the lagging behind now the the poor population make out 48 percent of the population so the end result of that treatment was water consumption went up quite dramatically distance of of social context we use context and social comparisons a lot in order to design behavioral instruments but people in the developed world are used to very distant social relations the reference group is very broad in in developing countries the reference group is very narrow so it doesn't matter what young mean or Ronaldo say it is ultimately what your mother says or what your father says and and those social comparisons mean that it's very difficult to act to introduce a behavioral tool in such a reduced social comparison group it's it's an open question actually the other problem that I see is that a strong finding from the literature is that cooperation breaks in the presence of freedriding so you can have a big group cooperating but when you introduce a freedrider or a couple of freedriders people that contribute less than the average or do not match the sort of the excitement of cooperating with each other quickly the cooperation the whole group collapses yet free riding is very ubiquitous in the developing world we have a very big informal sector and that big informal sector still goes for social security still goes to hospital still sort of gets conditional cash transfer programs and so on and so forth so we need to in a way create cooperation in the context of freedriding and there is absolutely no literature in that sense available to actually enlighten our decisions and finally most of what we know about behavioral insights comes from individual decisions and have been trying to convince you that behavioral decisions individual decisions are still important but we need to know a little bit more about communities companies cooperatives producer associations those organizations are very important when it comes to making decisions consumption decisions too and we know also very little about that so by way of summary behavioral patterns and habits do matter they matter a lot there's a lot of evidence from developing countries showing from developed countries sorry showing that habits can be altered can be changed by social influence they can be changed by changing the choice architecture and you have a paper there cited from from your own production now I believe that these behavioral insights these behavioral tools should be both a complement and an input to traditional policy instruments we should not abandon that toolbox of just you know laws regulation pricing subsidies taxes but we know very little on the interaction of these tools some of my colleagues for example in Colombia working with fisheries have very negative examples of social norms interacting with for example prohibitions if the government comes into a community and starts implementing regulations or prices or subsidies the social norms collapse but that's in the context of fisheries it could be different in other settings and I think we need to learn a lot more so as a final key message this pro-environmental behavior needs to be our new habit it needs to be a new routine in a way but for that to happen we need pro-sustainable policies that are sustainable themselves and they need to be sustainable in the very long run we cannot have just temporary patches and and behavioral insights are definitely a key input into such policies thank you okay thanks Francisco we have time for questions now a good amount of time for that and also I just want to put in the plug that after this session there's a reception set up right outside in the fireplace lounge so you can keep chatting with Francisco and each other over some food and drinks and things okay so we're going to try to move this microphone around those who ask questions so please raise your hand and I'll get you the mic but I can let you call on people if you'd like thank you very much for the talk thank you question on the example of shark fin soup and dog lover how do you determine which one is negative and which one is positive yeah like a good question I and when it comes to the shark fin that one is negative because it has a it's a huge impact on on the shark population in particular I know the behavior of dog lovers could be negative eventually too right the the sort of food they provide and the amount of money they spend and so on but what I meant more was that it creates a cohesion around the community that is very strong and it's a it's a very pro-social type of attitude right and that's what I thought was valuable but sure the the food and the expenditure excessive expenditure on food could be bad now that is in the eye of the beholder right what I'm saying is that you can target that with behavioral instruments thank you so I had a question about kind of where you ended on thinking about this interaction between sort of our standard policy tools of incentives and fines and that sort of thing and this behavioral thing and the behavioral aspects and I was wondering how say in a developing country context how much we can push the behavioral factors on their own when some of the choice people are making ours are actually in their own self-interest right that it there's an externality problem and so even if we can solve the inaction the paralysis that happens because of status quo bias and discounting and all of that is there still scope or is it is it still limited to sort of increasing the effectiveness of these other policies let me ask you when you say that when those decisions are in their self-interest you mean and they are sort of a a vulnerable group of society yeah so for example like um I'm thinking about a recent study in I think it was Uganda where the farmers were reducing how much they were deforesting their land because they were paid right and they were deforesting their land because they were poor um they're you could have I mean maybe I'm being cynical you could have lobbed all the pro-social messages and to make it as hard as possible to deforest but ultimately like they were just trying to keep their farms going I mean informal standard economics right one should think that if if there is a contradiction between what is good for the individual and what is good for society then we should change the behavior of the individual only if society can more than compensate or at least compensate the losses of that change behavior I've met this so many times in in my career you have a farmer and you want that farmer we're talking earlier on you want that farmer to protect the river well why that far if you take 20 meters on each side of the river to create a repair in forest who's gonna pay the farmer for that and the farmer has also kids and and family and and worries about the future and all these things we need to compensate that farm if we cannot then society is not valuing that resource and in principle the farmer should continue business as usual now that's the extreme position there are other the other part of the argument is that it could be in the farmers self-interest to change the behavior and there we're just fixing the intertemporal decision-making process the fact that there is a myopia of intertemporal choices and so the the solution in general is very problem specific but typically we should not change the behavior of a farmer of the one individual say unless society as a whole can compensate that that the costs assumed by the new thank you who else has a question you had a question I was wondering if you hadn't any examples of habitual changes that are not dependent on policy implement in policy being implemented changes in habits in terms of sustainability because I know there are a lot of people in the world for example with a lot of desire to make changes towards to combat the fight of climate change but right like international bodies aren't doing a thing so well I I talk about being vegetarian or even being vegan but I think being vegetarian is more important or we're just reducing the amount of meat those are changes in habits that can easily lead to very pro-environmental pro-environmental impacts climate change being one of them there are examples of how we use energy in our homes or how we use water in our homes that requires very small changes in habits how long you take a shower whether you leave a light on or not even technological fixes so for example here in all your houses I'm sure you have these iretors to deliver the water to your houses this is a small fixture that is at the end of the when you take a shower and you're in your shower that delivers water with a lot of air so that you have the feeling that you have a lot of water facing you but it's actually very little water the faucet or the shower in many places in the developing world there aren't such so on Friday the advertising I'm going to be talking about a piece of research we where we actually installed these devices in many households and did a randomized control trial to explore what is the effect on water efficiency and water use and one of the findings of that experiment is that people take it off because they cannot make the change towards the feeling of taking a shower for example with these fixtures compared to taking a shower without them it's a behavioral it's a change in habits you're used to taking a shower with some properties and the fixture actually changes your problem you're still clean after the shower or hopefully if you take a good shower you're clean you're still clean you took a shower you're fresh and everything it's just that the feeling that you're used to needs to change and it takes time for that so if we saw many households abandoning the fixtures before they actually get used to and we also saw households that actually remain with the fixtures for longer time they get accustomed to the fixtures and then continue using them long into the future so we see this adoption for for the because they cannot change habits at the beginning that's another example with energy is another example so I wanted to ask you about carbon taxes because on the one hand they seem like a really powerful way to make these decisions habitual and automatic because the price is there and it's just about kind of internalizing these externalities but the kind of the proposals that you hear come coming from kind of some of the conservatives that are pushing the idea of a carbon tax is to you know replace all these other policies with just kind of this one simple carbon tax yes and that seems to me that maybe that's based pretty purely on this idea that we're all very rational you know homo economicists and I'm curious just what your kind of reaction that policy proposal would be to replace our broad set of individual policies with something like a very simple cross-border carbon tax I think you you and I should have the same position of this let me the from an economic perspective carbon emissions come from such a variety of sources and the cost of reducing carbon emissions is so heterogeneous is so different between one industry and the other and so on and so forth that the from from strictly economic speaking right the only way to increase the scale by which we reduce emissions is by increasing the price for all emissions irrespective of where they come from and irrespective of how costly it is to reduce those emissions and by setting up a tax for those industries that is very cheap to reduce they were emissions they are going to reduce a lot of emissions and for those that is very expensive they are not going to reduce that many emissions that much and that is efficient from an economic perspective so that's basic now the problem the follow-up problem is okay but what do you do with the other policies that's the first and what do you do with the revenues of that tax and there is where there is a lot of disagreement within economists because for example I agree fully with you that that tax needs to be accompanied not just by communication campaign but by other means that facilitate the switch towards low carbon economy and some of them might be behavioral right some some of them might be you know incentives to change your car for example you had a carbon tax but a payment for taking old cars out of the road well that will make the adjustment to the tax quicker you remember that after all a tax will indeed be hard on people but so if we make that easier for them the emissions will the effect of the tax will be quicker the simplest example from transportation is you can put a tax and that is going to be hard on people but if you give people the option of very efficient public transportation then the burden of the tax that's the affordable the burden of the tax is much lower because now they have an option they will continue to take the trips they want just with public transportation and the second point is what to do with the revenues some economists argue just put the revenues into the budget of the government and and some others argue well no those revenues need to be used precisely to produce that public transportation in a quicker way so that you reduce the burden of taxation as quickly as possible nobody likes to pay taxes so as soon as you can reduce the the burden of taxation the better and if you use revenues for that well so that will be a very efficient a very sort of circle solution I belong to that group like you know just get the revenues and put them as soon as possible to reduce the burden of the tax that would speed up the process and part of the reason is also I interact a lot with with system ecologists working with climate some of my colleagues are and they have a sense of urgency in when it comes to how quick we need to reduce the the emissions that is scary we need to be much quicker than we are actually being and for that I think we need to to put all our effort into the tax and then into subsidizing activities or investing in activities that are actually lower emission so we have time for a couple more questions if you haven't gotten one get my attention because I'll try to move the mic around so make sure I see your hand great thank you um at the end of your talk you listed some other areas where we may want to apply behavioral economics behavioral sciences um just to put a plug in there too is is can we apply these approaches to understanding how policymakers make decisions how to incentivize them to make the right decisions and then I guess the question I have maybe if I have a comment on that's fine but is the utilization of these tools uh by for for reasons that may or may not be desirable by us right I look at what China is doing with their social impact scoring incentivizing visiting your mother by giving you primacy in in you know in in an opera ticket or something along the way or using big data or remote sensing to understand your behaviors and trying to nudge and incentivize so are there some limits that I know there's a critique critique around paternalism um in some of the limits of this work yeah so I on purpose don't didn't want to go into behavioral interventions of politicians because yes they are you can use some of these tools to nudge politicians and and there is some research trying to understand how politicians perceive this this instruments and it's it's very much along the the lines that you would expect when it comes to differences in the us versus euro versus south america versus you know you see differences that are aligned with what one would expect when it comes to your second question there are of course limits right to how much you can intrude and there is a backslash against the use of these behavioral instruments in or nudges to be more concrete because at the end is like you're pushing people around to behave in one way or another and there are limits to that it should be also freedom for them to decide now the key to to a nudge or to a behavioral intervention is that it it shouldn't be too costly to the individual to make the change right because otherwise you're imposing it's similar to a to a policy instrument it should be something that they do almost automatically without suffering or enduring a big cost and as long as we remain within that I feel confident that this can be pushed through but there are very intrusive nudging exercises going around a lot of backslash against against them so behavior changes are more sustainable in the long run I hope there's more sustainable but then the financial incentives like would you say no I think there are compliments right but we need to make sure that the the policies are sustained in the very long run and I think a behavioral incentives behavioral tools or instruments or policies should be designed so that even the financial incentives are more palatable more acceptable in the future and that will make the policy more sustainable in and on itself so do you think that if you use financial incentives initially because they might be more like they might be easier to implement into a society that they will lead to behavioral changes in the long run or I don't know that's that's a really good question I I don't think that financial incentives are more are easier to implement on the country I think for example with plastic bags we can introduce sort of a something that just instead of getting a bag automatically you need to ask for the bag a plastic bag well that's one tiny tiny change in the decision framework and then you you follow up with information campaigns and after a while people lose the taste for plastic bags or the urgency to have a plastic bags they get used to bring their own plastic bag and where where that's the case you you hit the industry with a tax on plastic bag and that could be the end of it but you know the the adjustment in behavior took place before you actually put the tax the taxes like the final goodbye right it could be circumstances and with the opposite is is is the case but one important thing about real economics is that it's very case specific it's very situation specific yeah okay quick question I've seen this approach implemented where the idea is to teach kids in school certain behaviors so that they can bring them home let's say they they do recycling and so it becomes a habit for them so do you have evidence I mean would you think of this as a nudge and do you what is your thing I mean your thought about this you think it's effective have you seen any good well there's a this there's one interesting case the NOAA has developed this package of education for kids in the US in which they teach them about the implications of using single use plastics at home and the hope is that that will be transmitted to the parents too so as part of that research that I told you we're sort of starting with the marine plastic pollution we are trying to see if applied those packages developed by NOAA in different countries and then interview attitude and a change attitude and now changes both in in the kids themselves but also as a follow-up in the parents a few months afterwards and so on so I think that's something that we we would like to explore but many people claim that household decisions are shaped by what the kids believe is right or wrong and so I think it's a very promising area of intervention definitely