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Social Preferences and Environmental Externalities

Campos-Mercade, Pol LU ; Ek, Claes ; Söderberg, Magnus and Schneider, Florian H (2025) In Working Papers
Abstract
Standard economic theory assumes that consumers ignore the externalities they create, such as emissions from burning fossil fuels and generating waste. In an incentivized study (N = 3, 718), we find that most people forgo substantial gains to avoid imposing negative externalities on others. Using administrative data on household waste, we show a clear link between such prosociality and waste behavior: prosociality predicts lower residual waste generation and higher waste sorting. Prosociality also predicts survey-reported pro-environmental behaviors such as lowering indoor temperature, limiting air travel, and consuming eco-friendly products. These findings highlight the importance of considering social preferences in environmental... (More)
Standard economic theory assumes that consumers ignore the externalities they create, such as emissions from burning fossil fuels and generating waste. In an incentivized study (N = 3, 718), we find that most people forgo substantial gains to avoid imposing negative externalities on others. Using administrative data on household waste, we show a clear link between such prosociality and waste behavior: prosociality predicts lower residual waste generation and higher waste sorting. Prosociality also predicts survey-reported pro-environmental behaviors such as lowering indoor temperature, limiting air travel, and consuming eco-friendly products. These findings highlight the importance of considering social preferences in environmental policy.
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Please use this url to cite or link to this publication:
author
; ; and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
D01, D62, Q53, social preferences, prosociality, environmental behaviors, externalities
in
Working Papers
issue
2025:6
pages
70 pages
language
English
LU publication?
yes
id
6560effd-1bf0-4a29-aad9-bd42fba4edd7
date added to LUP
2025-05-19 16:37:03
date last changed
2025-05-20 09:44:51
@misc{6560effd-1bf0-4a29-aad9-bd42fba4edd7,
  abstract     = {{Standard economic theory assumes that consumers ignore the externalities they create, such as emissions from burning fossil fuels and generating waste. In an incentivized study (N = 3, 718), we find that most people forgo substantial gains to avoid imposing negative externalities on others. Using administrative data on household waste, we show a clear link between such prosociality and waste behavior: prosociality predicts lower residual waste generation and higher waste sorting. Prosociality also predicts survey-reported pro-environmental behaviors such as lowering indoor temperature, limiting air travel, and consuming eco-friendly products. These findings highlight the importance of considering social preferences in environmental policy.<br/>}},
  author       = {{Campos-Mercade, Pol and Ek, Claes and Söderberg, Magnus and Schneider, Florian H}},
  keywords     = {{D01; D62; Q53; social preferences; prosociality; environmental behaviors; externalities}},
  language     = {{eng}},
  note         = {{Working Paper}},
  number       = {{2025:6}},
  series       = {{Working Papers}},
  title        = {{Social Preferences and Environmental Externalities}},
  url          = {{https://lup.lub.lu.se/search/files/219504753/WP25_6.pdf}},
  year         = {{2025}},
}