Climate change poses a significant threat to human existence. While there are still plenty of natural scientific questions to be answered, many of the thorniest challenges are economic, political, and social in nature. Many of those, in turn, are often outside standard “rational” boundaries and call for a behavioral lens. In this collection we focus on just that behavioral economics perspective.

Broadly defined, “[b]ehavioral economics uses variants of traditional economic assumptions (often with a psychological motivation) to explain and predict behavior and to provide policy prescriptions” (ref. 1, p. 385). In particular, behavioral economics accounts for decision-making models other than those based on perfectly rational self-regarding preferences. For example, it allows for cognitive limitations in decision-making and for alternatives to be compared to a reference outcome. It also allows for other-regarding preferences, i.e., considering social context, and for self-control problems in decision-making. Furthermore, it allows for psychological reactance to policy instruments that limit the individual’s choice set (see e.g., ref. 1, and also different review articles on behavioral economics for the environment2,3,4,5,6,7,8). Additionally, behavioral economics is very closely linked to the use of randomized control trial experiments, which allow for genuine testing of behavioral interventions.

How can research in behavioral economics contribute to the study of climate action?

Behavioral economics can contribute to the study of climate action in at least four areas (see also refs. 9,10,11): First, it can help understand the fundamental problem of overcoming climate change and search for potential remedies. This is achieved by modeling (some of) the key features of the climate change dilemma and studying behavior in simplified environments. The atmosphere is often seen to be a “common pool resource” (used here as a “garbage dump”), and preventing climate change is a global public good12. Behavioral economics uses stylized social dilemma experiments13,14,15,16,17 to gain insight into the extent of the free rider problem and the institutions that could overcome it, such as democratic voting, communication and sanctions. It also studies how behavior adjusts when some features of the initial model change. Examples of the latter include social dilemma games that are specially designed to account for a tipping point threshold18, the probabilistic nature of climate change19, heterogeneity of wealth, risk, and potential loss from climate change20,21,22, delegating the negotiations to a small group of representative decision-makers23, and the intergenerational aspects of climate change24,25.

Second, behavioral economics investigates the effectiveness of “hard” and “soft” interventions on pro-environmental behavior. These can be measured using controlled laboratory settings, which allow for a fully defined welfare measure as the maximum payoff from cooperation is set by design, or in the field, where the overall welfare effect is usually more difficult to measure but may also be more realistic. Particular examples are default nudge interventions26,27,28,29, manipulation of social information30,31, command and control regulation with fining32, and tax compliance33.

Third, behavioral and experimental economics allows experimenters to evaluate the efficacy and efficiency of policy instruments and institutions. Plott34 was the first to study market-based environmental instruments in the laboratory. Subsequent studies have focused on permit trading auctions35,36,37,38, as well as on incentive-compatible market mechanisms39,40. Doing so allowed them to expand on purely “rational” and price-based responses and instead focus on particular design features of the instrument.

Last but definitely not least, behavioral economics helps to reveal and estimate pro-environmental preferences, what drives this seemingly altruistic behavior41,42. This level of analysis comes full circle, when it engages with questions around institutional and policy design to channel pro-environmental preferences toward solving common goods problems, looking towards why and under what circumstances humans cooperate to solve these problems43 and how to design policies to best take advantage of such pro-social behavior44.

Behavioral economics of climate action: contributions of this collection

This collection contains eight studies that adopt different behavioral economics perspectives on climate action, from the theoretical contributions in refs. 45,46,47 to the randomized control trial experiments by refs. 48,49,50, and the empirical analysis by ref. 51 and meta-analysis by ref. 52.

In particular, ref. 45 introduces the notion of a “social tipping point”—a small behavioral change that could lead to a sudden change in the system if it occurs. Reference 46 presents an interesting analogy between the voyage of the Titanic and the fight against environmental degradation. They then analyze the performance of international organizations in this regard. The next two articles analyze results from novel field (randomized controlled trial) experiments that investigate the effects of “nudge interventions” on behavior for the environment. Reference 49 studies the effect of a policy that provides people from Uganda with information about solar devices and how to finance them. Reference 50 analyzes the effect of imposing “Veggie Days” in university cafeterias on greenhouse gas emissions. Next, ref. 52 presents a systematic review and a meta-analysis of public support for carbon pricing policies. Reference 48 studies the relationship between pro-environmental behavior and well-being. Meanwhile, ref. 47 discusses the effectiveness of price instruments in mitigating environmental externalities when individuals act in a boundedly rational manner. Finally, ref. 51 analyzes data from Twitter (now X) communications of large stakeholders (firms, IGOs and NGOs), to study online information about climate change, which, in turn, would impact climate action.

A closer look at each of these studies shows their unique contributions to the field: In a perspective article, ref. 45 introduces the notion of “social tipping interventions” (STIs). In an influential study, ref. 53 uses the term “tipping elements” to describe how crossing a threshold may lead to a significant and often irreversible change in the state or development of large-scale components of the Earth system (e.g., a shutoff in North Atlantic Deep Water formation and the associated Atlantic Thermohaline Circulation, see ref. 53, p. 1789). By contrast, social tipping points are tipping behaviors within socio-economic systems to invoke positive ecological changes54. STIs then are policies and nudges aimed at triggering self-reinforcing surges in support of a particular climate action. The article provides two specific examples for STIs. The first, taken from ref. 55, looks at firm behavior: Once a sufficient number of firms use primary data to report emissions along the supply chain, this will cause a surge in emission reduction, as those remaining firms that still use industry averages will be perceived as larger than average polluters. This, in turn, will further pressure these firms to reduce emissions and use primary data to report their actual emissions. A second example is from ref. 56, where crossing a threshold around adoption of environment-related food labels could lead to a surge in purchasing behavior towards products with a lower environmental footprint. In both cases, reaching the socio-economic tipping point leads to a large norm shift toward pro-environmental behavior among firms and individuals, respectively.

Reference 46 introduces a novel and intriguing analogy between the voyage of the Titanic and combating environmental degradation (steering spaceship Earth). For example, despite receiving signals of imminent danger, the crew of the Titanic did not take precautionary measures, which the authors compare to the current state of wildly insufficient greenhouse gas mitigation. They also point to the differences in survival rates between first-, second-, and third-class passengers of the Titanic, likening it to global inequality. Without a global government (and centralized enforcement), steering spaceship Earth to combat climate change requires different international organizations to provide different public goods at different scales. Consequently, the authors identify three key steering capacities to avoid catastrophic climate change in international organizations: First, identify standards and best practices, second, create mechanisms for coordination and emergency response; and third, curate information to raise awareness and promote action. Finally, the article analyzes the performance of international large-scale organizations and current environmental institutions vis-à-vis these three steering capacities.

Reference 48 explores the relationship between pro-environmental behaviors (PEBs) and individual well-being, and how this link could motivate sustainable lifestyle shifts. Their article describes four experimental studies with a total of over 1700 participants, investigating whether awareness of the relationship between PEBs and well-being can motivate sustainable lifestyle shifts. Study 1 investigates individual beliefs about how PEBs affect well-being, and whether these beliefs predict how frequently individuals engage in PEBs. Study 2 explores whether personal narratives emphasizing how PEBs improve well-being lead to more positive attitudes and stronger intentions to engage in PEBs. Study 3 investigates whether research-based summaries on the well-being benefits of PEBs enhance attitudes, strengthen intentions, make people more persuasive in encouraging sustainable habits, and increase their likelihood of seeking out more possibilities for sustainability. And finally, Study 4 explores whether combined messages of narratives and research summaries about PEBs’ benefits for well-being improve attitudes, intentions, and persuasiveness.

Although PEBs are often linked to greater well-being, the authors find that most people do not recognize this relationship. This lack of awareness is a possible barrier to adopting sustainable practices, as beliefs about the well-being benefits of PEBs are associated with more frequent engagement in these behaviors, as well as positive attitudes and intentions. Messages emphasizing the personal benefits of PEBs improved attitudes and made participants more persuasive in encouraging others, although their effects on actual behavior and intentions are inconsistent. Overall, messages on the relationship between PEBs and well-being make people more persuasive and motivating in their communication about PEBs, suggesting a potential for “ripple effects”—i.e., ways in which messages about the personal benefits of PEBs may have effects beyond the individuals directly exposed to them.

In a natural field experiment, ref. 50 studies the effect of reducing meat consumption on greenhouse gas emissions by imposing “Veggie Days” (where regular meat dishes are replaced with vegetarian and vegan dishes) in three German university canteens. The research question focuses on the impact of Veggie Days on the consumption of vegetarian and vegan food, evasive behavior, and total sales. The study’s unique dataset includes data from three German university canteens from 2017 to 2019. The authors find that the temporary ban on meat dishes did not lead to leakage with students avoiding the canteens, yet up to 22% of customers ate at other on-site alternatives where meat was available. Students were less likely to switch to alternatives than staff and guests. The study calculates that a Veggie Day could reduce greenhouse gas emissions on that day by up to 66%, and a less stringent implementation of a Veggie Day, where only beef dishes were removed from the menu, could reduce emissions by up to 51%.

Reference 49 reports on a natural field experiment conducted in a developing economy, using so-called “Village Saving and Lending Associations (VSLAs)”—a common social group among refugees in Uganda for saving and borrowing money for productive investments. In poor countries such as those in sub-Saharan Africa, pollution primarily stems from the use of inefficient and outdated technologies for energy production. Given this background, this study investigates the effect of a behavioral intervention that is meant to increase awareness of the purchase and use of off-grid certified solar devices among refugees in Uganda. In particular, in the absence of grid connectivity, off-grid solar devices offer a clean, safe, and reliable alternative energy source, the lack of which is especially severe for refugees. The behavioral intervention aims to address three key barriers to the adoption of certified solar devices: First, low knowledge of products. Second, low trust in solar vendors, and third, increased knowledge of financial options for purchasing the devices. The intervention addressed 157 VSLAs, with 155 VSLAs serving as controls. The intervention treatment resulted in greater pursuit of solar products (e.g., treatment individuals were 32 percentage points more likely to have a savings goal for a solar product). Moreover, the support of the participating VSLA group was instrumental in mediating the impacts of the intervention.

Reference 52 presents a systematic review and a meta-analysis on public support for carbon pricing policies (market-based instruments in form of either carbon taxes or emissions trading systems) with and without revenue recycling options. Using a machine-learning-assisted search to screen the literature, their dataset includes 35 studies with 70 surveys across 26 countries. A total of six revenue recycling options were identified: uniform and targeted cash transfers, green spending, tax cuts, corporate tax cuts, and public finance. The authors find that green spending (i.e., using revenues for climate-friendly projects) is the only revenue recycling option associated with a statistically significant increase in public support. Moreover, the effects may depend on the geographic region in which the studies were carried out, highlighting the need for additional research in countries in the regions of Africa, Latin America, and the Caribbean.

Reference 47 examines arguments for and against the use of pricing instruments to mitigate environmentally harmful behavior. They begin by outlining the key arguments in favor of using pricing instruments, such as emission taxes or tradable emission permits, to offset the negative effects of environmental externalities. In short, prices ensure that private and social costs are aligned. It does not rely on volunteerism and also forces environmentally unconscientious consumers, who base their purchase decisions solely on price, to consider environmental externalities. Prices also address the heterogeneity of polluters, ensuring that marginal abatement costs are equalized across different sources of pollution, thus achieving pollution abatement at the lowest possible cost. Furthermore, setting prices at the source implies that all other prices in the economy will adjust to reflect indirect external costs. Pricing emissions also prevents leakage in the form of rebound effects. Last but not least, pricing emissions is dynamically efficient as it stimulates innovation and the adoption of new, cleaner technologies. It alone does not fully internalize the positive externalities associated with research and development, but pricing is technologically agnostic.

The authors then discuss the main arguments against pricing environmental externalities that have been put forward in both the public and scientific debates, beginning with pricing instruments being associated with neoliberal market ideology. They give implicit “permission” to pollute. Pricing instruments may also have undesirable distributional impacts. And most importantly, bounded rationality prevents pricing instruments from achieving their intended purpose. Moreover, pricing may crowd out intrinsic motivation to behave in an environmentally friendly way. The authors then counter the anti-pricing arguments by first arguing that the pro-pricing arguments still hold if a considerable proportion of economic agents behave in a bounded rational manner. In the absence of pricing instruments, bounded rationality can even exacerbate unsustainable behavior. Second, the crowding-out effects of price instruments are often outweighed by parallel crowding-in effects. Third, undesired distributional effects can also occur through non-price instruments. Fourth, there is strong empirical evidence supporting the dynamic incentives of pricing instruments to encourage mitigation. Fifth, the authors advocate transparent communication on the economic efficiency of using tax revenues, but oppose earmarking for particular purposes.

Finally, ref. 51 analyzes online social media communications on Twitter from 2014 to 2021 of three groups of stakeholders: First, the top eight largest greenhouse gas-emitting firms in the fossil fuel industry. Second, eight inter-governmental organizations (IGOs), and third, fourteen non-governmental organizations (NGOs). The motivation is to learn about how powerful stakeholder groups shape online climate information and misinformation. The authors find that online communication is neither influenced by the industry’s stock performance nor impacted by extreme weather occurrences such as storms, drought, wildfires, and high temperatures. In fact, stock returns are largely uncorrelated with online communications. Moreover, in most of the industry’s negative sentiment communications, the topics were climatological changes, criticism of Trump’s drilling and environmental protection policies, divestment from fossil fuels, extreme weather, and gas station customer service. Among the IGOs, the most negative tweets were related to the conservation of endangered species, resistance to Trump’s drilling policy, and extreme weather events. Among NGOs, most negative sentiment communication revolved around stopping toxic and plastic waste, extreme weather, fossil fuel divestment, and Trump’s environmental protection initiatives. The analysis also suggests that the top polluting fossil fuel firms are responsive to online communication by NGOs on topics associated with environmental justice and climate change themes. Moreover, NGOs have a greater influence over online discussions than IGOs and firms, possibly due to their larger online reach.

Promising research avenues

Climate change is a governance problem, putting human decision-making front and center in any successful mitigation strategy. This collection focuses on the behavioral perspective within environmental and climate economics and policy, particularly with regard to incentives for mitigating environmentally detrimental behavior. Behavioral economics differs from strictly rational approaches and often goes well beyond pricing instruments historically favored by economists. However, several contributions here show that the effectiveness of pricing instruments, as proposed by ref. 57 and frequently reiterated by economists, is not necessarily incompatible with bounded rationality. The collection of essays in this special edition also reveals a number of fruitful avenues for further research.

The first avenue for economists, political scientists, and others can be in researching how to better communicate the effectiveness of pricing policies, and how the effects of pollution and its mitigation can be made more salient to key stakeholders. This avenue can also be connected to the emerging literature on “fake news” and polarization58,59.

A second avenue is in exploring how distributional and other social concerns can be better addressed through complementary measures, such as ecological tax reforms or the per-capita redistribution of tax or permit revenues. This is particularly noteworthy, given the increasing income inequality both across and within countries, with a key question focused on how income inequality relates to CO2 emissions60 and the desirability and design of climate policy.

A third avenue is to investigate the international dimension of how countries that do pursue stronger climate policies incentivize others to take similarly ambitious action. That opens the topic of stick-and-carrot measures such as the European Union’s carbon border adjustment mechanism61 and of the appropriate policy sequencing62,63.

Finally, there are ample research opportunities to probe what motivates people to take pro-environmental actions11, and how taking these steps interacts with their support for climate policies, in particular the complementarity versus substitutability from individual to collective action, and vice versa. Linked to this avenue is an area that little is known about, the role of societal leaders in affecting the public to make emission-reduction choices (see ref. 64 for a notable exception), and how to make people focus on actions with high impact on the environment65,66. That may indeed be the most important avenue of research for behavioral economics of climate action: how to motivate more climate action commensurate with the latest science and economics.