‘Nudge’ factor plays big role in prospects for wrestling climate change, says economist

NEWS — A new global strategy for climate protection isn’t likely unless a broad coalition can be forged that includes both have and have-not nations, a self-declared “climate agnostic” told 60 students and members of the public Thursday.

Prof. Jason Shogren.

Prof. Jason Shogren.

Jason Shogren, an economics professor in Wyoming and a co-recipient of the 2007 Nobel Peace Prize, used his experience as a former advisor on climate economics to the White House, professor to the King of Sweden and involvement in the Kyoto accord to illustrate the question, “Who pays for climate change?”

He was speaking during a two-day visit to Thompson Rivers University.

Shogren said economics can be used to calculate the costs both of doing nothing and doing something about climate change, but a high likelihood of global catastrophe would be needed for short-term protocols to make political sense from a cost-benefit point of view.

He said the successor to the Kyoto protocol is likely to be an everybody-is-in type of agreement rather than one that excludes rising superpowers like China and India.

The costs of slowing climate change will be much lower if China and India take part in a meaningful way, Shogren said, but “developing nations want an opportunity to grow, too.”

The U.S.-China stalemate is a big factor, he said. “The U.S. and China coming to some sort of agreement on this is huge.”

Shogren referred to the “nudge theory” put forward in a book by Richard H. Thaler and Cass R. Sunstein called Nudge: Improving Decisions about Health, Wealth and Happiness that said decisions depend on the way in which choices are presented.

He pointed out that Scanadanavians live healthy outdoor lifestyles and ride bicycles but that’s influenced by $10-a-gallon gasoline.

He said people and countries need to be motivated by self-interest. Shogren gave as an example the consumption of electricity in a neighbourhood. It’s been found that if homeowners receive on their monthly hydro bills a comparison of their own consumption with that of their neighbours, consumption drops as they compete.

No electricity rate increases are necessary.

“It really sounds to me like your mom. Is that any way to run a country? Well, maybe. The question is when your mom leaves do you stick with it?”

Slowing climate change “is absolutely going to be cheaper if you can nudge people.”

When he mentored King Carl XVI Gustaf, the monarch wanted to know if changing light bulbs in his castle would save energy or if the bulbs would give off too much heat. Shogren advised him that changing the bulbs would be fine.

Most people don’t have the power nor financial means of a king to make such changes.

Yet the costs of doing nothing will ultimately be higher than the costs of doing something. One of the barriers is the fact that doing something requires an investment from which the current generation won’t reap the benefit.

“Typically we do not like ambiguous risk as a species,” he said. “Climate change is one of the bigger ambiguous risks we face.”

He said former Vice President Al Gore never talking about probabilities when he was crusading against climate change, “just damages,” because he wanted to get people thinking about the problem.

Shogren framed the big question as being whether or not we can come up with a way to manage the risks of climate change.  In weighing the costs of doing something versus the costs of doing nothing, we need to think in terms of lowering the cost of taking action.

We can do that by changing the kinds of energy we consume, getting global participation in the search for answers, and embracing flexibility in the use of low-carbon solutions.

The costs of doing something about climate change are actually quite cheap he said, depending on what techniques we use — cap and trade, carbon taxes and other tools. “None of these things are stove pipes. They’re all interconnected.”

The change to cost management from a cost-benefit approach is an important shift in the approach to climate change, Shogren said. “Now we just have to figure out how to implement it.”


About Mel Rothenburger (8126 Articles) is a forum about Kamloops and the world. It has more than one million views. Mel Rothenburger is the former Editor of The Daily News in Kamloops, B.C. (retiring in 2012), and past mayor of Kamloops (1999-2005). At he is the publisher, editor, news editor, city editor, reporter, webmaster, and just about anything else you can think of. He is grateful for the contributions of several local columnists. This blog doesn't require a subscription but gratefully accepts donations to help defray costs.

3 Comments on ‘Nudge’ factor plays big role in prospects for wrestling climate change, says economist

  1. Lyman Duff // April 5, 2014 at 6:14 AM // Reply

    Yes, in Kamloops the “nudge” theory is working. Unfortunately is working in the opposite, negative direction.
    Here we try to out compete each other on the largest, highest meanest, goofiest pick-up truck. All that wasted fuel just for show! $10 a gallon it should be for these people!

  2. Great write-up Mel !


    Sent from my iPhone

  3. Great ideas! Wish I had been there. Check out “solar city” in the States. It is a program where they install solar panels on your home and bill you monthly for electical to make solar power more affordable for families. Innovation is great!

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