Social Preferences and Environmental Externalities

Pol Campos-Mercade (), Claes Ek (), Magnus Söderberg () and Florian Schneider ()
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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

No 2025:6, Working Papers from Lund University, 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 (search for similar items in EconPapers)
JEL-codes: D01 D62 Q53 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2025-05-20
New Economics Papers: this item is included in nep-res
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