Scandinavian Working Papers in Economics
Working Papers,
Lund University, Department of Economics
No 2025:6: Social Preferences and Environmental Externalities
Pol Campos-Mercade (), Claes Ek (), Magnus Söderberg () and Florian Schneider ()
Additional contact information
Pol Campos-Mercade: Department of Economics, Lund University, Postal: School of Economics and Management, Box 7080, S-220 07 Lund, Sweden
Claes Ek: University of Gothenburg, Department of Economics
Magnus Söderberg: Griffith University, Department of Accounting, Finance and Economics
Florian Schneider: University of Copenhagen, Department of Economics
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.
Keywords: social preferences; prosociality; environmental behaviors; externalities
Language: English
71 pages, May 20, 2025
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