Social Preferences and Environmental Externalities

Pol Campos-Mercade, Claes Ek, Magnus Soederberg and Florian H. Schneider
Additional contact information
Pol Campos-Mercade: Department of Economics, Lund University
Claes Ek: Department of Economics, University of Gothenburg
Magnus Soederberg: Department of Accounting, Finance and Economics, Griffith University
Florian H. Schneider: Department of Economics, University of Copenhagen

No 25-06, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

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: 70
Date: 2025-05-27
New Economics Papers: this item is included in nep-inv
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