Higher-Order Risk Preferences Do Not Predict Climate Action

Abstract

Higher order risk preferences, prudence and temperance, have been linked to decisions with uncertain outcomes in the real world. However, their role in explaining pro-environmental behavior remains largely unexplored. In this study, we investigate whether individual higher-order risk preferences predict real-world climate action. Participants allocated a fixed amount of money ($38) —equivalent to the monthly carbon offset of a typical U.S. citizen— between themselves and Compensators, a nonprofit organization that facilitates certified CO2 offsetting. To minimize experimenter-demand effects, the donation decision was made about three months prior to the risk-elicitation task. Risk elicitation tasks involved substantial outcomes (up to $110). We also collected widely used hypothetical allocation decisions (e.g., 1% of household income) and self-reported survey responses on climate-related attitudes and behaviors. We find that higher-order risk preferences do not predict climate action or attitudes. Political ideology is the sole factor consistently explaining the variation in climate-related attitudes and actions.

Andreas C. Drichoutis

Professor of Consumer Behavior

His research interests are focused on decision making across a broad spectrum of topics pertinent to agricultural/food economics. His contributions are notably diversified spanning the area of contingent valuation and experimental auctions methods, choice under risk, inter-temporal decision making and applied demand analysis. Most of his research applies experimental economics methods to answer questions relevant to agricultural economists and decision scientists.