high degree of cooperation around common goals can overrule the disposition to short-term interests.
The importance of cultural context applies to all other forms of cost-benefit analysis. For example, mainstream economic theory assumes that people will avoid incurring short-terms costs to themselves even though their personal action might prevent larger longer-term costs for others.
In a famous and much quoted anecdote, the Nobel laureate economist Thomas Schelling told of being caught in an hour-long traffic jam of vacationers returning from Cape Cod. When people finally saw the reason for the delay—a mattress blocking one of the lanes—no one took the initiative to stop and move it. “For all I know,” he wrote, “it may still have been there the following Sunday.”
Schelling argued that nobody moved the mattress because there was no system to reward them for doing so. With his tongue firmly in cheek, he suggested a market-based system “that a traffic helicopter proposes that each of the next hundred motorists flip a dime out the right-hand window to the person who removed the mattress.”
Schelling then applied the same thinking to energy conservation. Even though we are urged to turn down our air-conditioning in the summer to avoid brownouts, he said, we do not do so because we know that our reduction would account for only an infinitesimal part of the total demand and therefore be of no benefit to ourselves. Without a penalty or a reward system, he argued, there is no motivation to commit anonymous acts of altruism.
Except that this is not how people in Japan behaved in 2011 after the Fukushima Daiichi nuclear power plant disaster in 2011 led to a sudden fall in the electricity baseload. When called upon to make a personal sacrifice to avoid brownouts, people willingly sweltered in indoor temperatures of over eighty degrees Fahrenheit. Without duress or reward, people willingly turned down the air-conditioning in their homes even when no one could see them doing so. The result was a 20 percent fall in peak energy demand in Tokyo throughout the summer.
So people’s tendency to avoid costs and act only in their self interest—often considered major obstacles to action on climate change—can be overruled by a sufficiently strong appeal to group identity and a visible social norm. The energy crisis was given salience with posters and reminders on all media, and even large billboards above major crossings that flashed daily rates of power consumption and the likelihood of a blackout. Following the tsunami that had killed sixteen thousand people, this was a time of exceptional unity, similar to that in the United States after 9/11. People were actively seeking ways to make a personal contribution, just as they do in wartime when they are brought together in the face of a common enemy.
And there was another very relevant factor at work: informed choice . In Japan, the social prominence of the energy shortage led people to see the normally neutral act of turning on an air conditioner as a morally charged choice between self-interest and the collective good. There is a very large difference between how people respond to a risk that is an accepted part of their current condition—their status quo—and to a risk that is presented as an informed choice. An experiment by the University of Chicago economist Richard Thaler, who has frequently collaborated with Daniel Kahneman, showed this very well. Imagine that you have been exposed to a fatal illness that has a one-in-a-thousand chance of killing you. How much would you pay for a vaccination? On average, participants in the experiment were willing to pay two hundred dollars for a vaccination to remove this small but deadly risk.
Now imagine that you have been invited to be a volunteer in medical research into this same disease. You will need to be voluntarily infected, with the same chance of death—one in a thousand. How much payment would you require as
The importance of cultural context applies to all other forms of cost-benefit analysis. For example, mainstream economic theory assumes that people will avoid incurring short-terms costs to themselves even though their personal action might prevent larger longer-term costs for others.
In a famous and much quoted anecdote, the Nobel laureate economist Thomas Schelling told of being caught in an hour-long traffic jam of vacationers returning from Cape Cod. When people finally saw the reason for the delay—a mattress blocking one of the lanes—no one took the initiative to stop and move it. “For all I know,” he wrote, “it may still have been there the following Sunday.”
Schelling argued that nobody moved the mattress because there was no system to reward them for doing so. With his tongue firmly in cheek, he suggested a market-based system “that a traffic helicopter proposes that each of the next hundred motorists flip a dime out the right-hand window to the person who removed the mattress.”
Schelling then applied the same thinking to energy conservation. Even though we are urged to turn down our air-conditioning in the summer to avoid brownouts, he said, we do not do so because we know that our reduction would account for only an infinitesimal part of the total demand and therefore be of no benefit to ourselves. Without a penalty or a reward system, he argued, there is no motivation to commit anonymous acts of altruism.
Except that this is not how people in Japan behaved in 2011 after the Fukushima Daiichi nuclear power plant disaster in 2011 led to a sudden fall in the electricity baseload. When called upon to make a personal sacrifice to avoid brownouts, people willingly sweltered in indoor temperatures of over eighty degrees Fahrenheit. Without duress or reward, people willingly turned down the air-conditioning in their homes even when no one could see them doing so. The result was a 20 percent fall in peak energy demand in Tokyo throughout the summer.
So people’s tendency to avoid costs and act only in their self interest—often considered major obstacles to action on climate change—can be overruled by a sufficiently strong appeal to group identity and a visible social norm. The energy crisis was given salience with posters and reminders on all media, and even large billboards above major crossings that flashed daily rates of power consumption and the likelihood of a blackout. Following the tsunami that had killed sixteen thousand people, this was a time of exceptional unity, similar to that in the United States after 9/11. People were actively seeking ways to make a personal contribution, just as they do in wartime when they are brought together in the face of a common enemy.
And there was another very relevant factor at work: informed choice . In Japan, the social prominence of the energy shortage led people to see the normally neutral act of turning on an air conditioner as a morally charged choice between self-interest and the collective good. There is a very large difference between how people respond to a risk that is an accepted part of their current condition—their status quo—and to a risk that is presented as an informed choice. An experiment by the University of Chicago economist Richard Thaler, who has frequently collaborated with Daniel Kahneman, showed this very well. Imagine that you have been exposed to a fatal illness that has a one-in-a-thousand chance of killing you. How much would you pay for a vaccination? On average, participants in the experiment were willing to pay two hundred dollars for a vaccination to remove this small but deadly risk.
Now imagine that you have been invited to be a volunteer in medical research into this same disease. You will need to be voluntarily infected, with the same chance of death—one in a thousand. How much payment would you require as
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