Heidelberg environmental economists investigate the factors determining the willingness to pay
What is it that prompts citizens in Germany to do something about climate change on a voluntary basis? Of major significance here is a mixture of factual knowledge, subjective assumptions and hearsay.
This is the result of an online field study involving 2,000 German citizens and conducted by environmental economists at Heidelberg University. In a research project at the Alfred Weber Institute for Economics, they inquired into the factors determining the so-called “willingness to pay” in connection with individual climate action.
Project leader Prof. Timo Goeschl, Ph.D. tells us that in economics willingness to pay is an instrument widely used to express preferences and value judgements. “But the concept is not purely monetary and should not be viewed too restrictively. For economists willingness to pay refers to the investment of resources an individual could have made use of for other purposes. These can be money, time or work,” says Dr. Johannes Diederich, one of the researchers contributing to the project, which was funded by the German Research Foundation.
To investigate willingness to pay for individual climate action, the Heidelberg researchers carried out an experiment in behavioural economics. Over 2,000 respondents were involved from all over Germany and from all strata of society.
The participants could choose between a sum of money and a real cutdown on carbon dioxide emissions. The emission reductions were realised by the researchers via the emissions trading system of the European Union. At the same time they inquired into the state of their respondents’ knowledge on the subject and their expectations, for example on the effects of emission reductions or their personal share in carbon dioxide emissions.
“Willingness to pay for environmental goods like climate protection is definitely not carved in stone,” says Prof. Goeschel. “It is strongly influenced by how much an individual knows about the subject.
But this knowledge is not merely the product of real facts, it is also made up of subjective assumptions and apparent knowledge.” Knowing more or even merely believing that one knows more, for example about one’s own contribution to climate change, will have a positive effect on the willingness to pay.
Another crucial factor determining willingness to pay for individual climate action is education. “Better educated people are more likely to reject the money in favour of an emission reduction,” says Prof. Goeschl. “This is independent of their incomes and also of the knowledge they have about climate change and the phenomena associated with it.”
The researchers came across an unexpected effect when they linked the decisions of their respondents with regional weather data. People living in places with higher outside temperatures were more likely to plump for emission reductions than for the money offered them. “We shall be looking into this effect in our further studies,” says Prof. Goeschl.
J. Diederich, T. Goeschl: Willingness to Pay for Voluntary Climate Action and Its Determinants: Field-Experimental Evidence. Environmental and Resource Economics (March 2014), 57:405-429, doi: 10.1007/s10640-013-9686-3
Prof. Timo Goeschl, Ph.D.
Alfred Weber Institute for Economics
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