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Confusing Opportunity Costs, Losses and Forgone Gains: Assessing the Effect of Communication Bias on Support for Climate Change Policy in the United States and Australia

Steve Hatfield-Dodds () and Mark Morrison ()
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Steve Hatfield-Dodds: CSIRO Energy Transformed Flagship, Canberra, ACT, Australia
Mark Morrison: Institute for Land, Water and Society, School of Business, Charles Sturt University, Bathurst, New South Wales, Australia

CCEP Working Papers from Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University

Abstract: Concerns about the economic impacts of achieving deep cuts in emissions are a pivotal issue in achieving the political support required for emissions reductions. We assess a widespread reference point bias in the communication of economic modelling of climate policy impacts, and find it significantly reduces public support for emissions reductions. At least one in five Americans and Australians incorrectly believe that reducing emissions would result in incomes falling from current levels - triggering loss aversion - rather than incomes rising more slowly. Avoiding this misunderstanding results in support being up to 23 percentage points higher than when impacts are presented as reductions in income from current levels. This suggests that clearly communicating that incomes continue to rise could have a larger effect on support for emissions reductions among US and Australian citizens over the next few years than increased public confidence in climate science. We conclude that improved communication of policy impacts, including that ambitious stabilisation goals are consistent with strong trend economic growth and rising incomes and employment, has a crucial role in facilitating an informed democratic response to climate change, and may be necessary for achieving a political mandate for global action.

JEL-codes: D70 Q54 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-ene and nep-env
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