Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2013:22: On Strategic Ignorance of Environmental Harm and Social Norms

Linda Thunström (), Klaas van 't Veld (), Jason F. Shogren () and Jonas Nordström ()
Additional contact information
Linda Thunström: Department of Economics and Finance, University of Wyoming, Postal: 1000 E. University Ave. , Laramie, WY 82071, USA
Klaas van 't Veld: Department of Economics and Finance, University of Wyoming, Postal: 1000 E. University Ave. , Laramie, WY 82071, USA
Jason F. Shogren: Department of Economics and Finance, University of Wyoming, Postal: 1000 E. University Ave. , Laramie, WY 82071, USA
Jonas Nordström: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: Are people strategically ignorant of the negative externalities their activities cause the environment? Herein we examine if people avoid costless information on those externalities and use ignorance as an excuse to reduce pro-environmental behavior. We develop a theoretical framework in which people feel guilt from causing harm to the environment (e.g., emitting carbon dioxide) and from deviating from the social norm for pro-environmental behavior (e.g., offsetting carbon emissions). Our model predicts that people may benefit from avoiding information on their harm to the environment, and that they use ignorance as an excuse to engage in less pro-environmental behavior. It also predicts that the cost of ignorance increases if people can learn about the social norm from the information. We test the model predictions empirically with an experiment that involves an imaginary long- distance flight and an option to buy offsets for the flight’s carbon footprint. More than half (53 percent) of the subjects choose to ignore information on the carbon footprint alone before deciding their offset purchase, but ignorance significantly decreases (to 29 percent) when the information additionally reveals the social norm, namely the share of air travelers who buy carbon offsets. We find evidence that some people use ignorance as an excuse to reduce pro-environmental behavior— ignorance significantly decreases the probability of buying carbon offsets.

Keywords: Behavioral; Decision Making; Externality; Ignorance; Social norms

JEL-codes: D03; D81; D83

26 pages, June 26, 2013

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