Social Preferences and Environmental Externalities

Pol Campos-Mercade, Claes Ek, Magnus Soderberg and Florian H. Schneider

No 11895, CESifo Working Paper Series from CESifo

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)
Date: 2025
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