[R-Code/Syntax]: Barrier or Enabler? Cross-cultural evidence on Cognitive Biases in Climate Protection

Manuscript Abstract: There is widespread speculation that cognitive biases pose severe barriers for humankind’s ability to engage in climate change mitigation. However, the real-life significance of such effects is a matter of debate, and is likely to be subject to the bias-modifying factor culture. The claims nonetheless imply a testable hypothesis: higher levels of cognitive biases should be predictive for lower willingness to pay (WTP) for climate change mitigation measures in a variety of settings including revealed or stated preference approaches. This study tests this hypothesis using a stated preference approach with university students from Germany and Indonesia. Our analysis proceeds in two steps, beginning with measuring four cognitive biases in each participant using a battery of pre-tested psychological scales. We subsequently implement a contingent valuation experiment eliciting WTP to mitigate sea level rise, allowing us to examine how WTP varies with the extent of cognitive bias. The results provide limited support for the hypothesis. Two of the four biases examined – Risk-Seeking in Losses and Present Bias – do not significantly predict WTP. Loss aversion is a (moderate) negative predictor in the German sample, whereas Positive Illusion is a positive predictor in the Indonesian sample. Summarily, cognitive biases predict mitigation behaviour; however, only in a minority of cases, and where they do, the prediction does not necessarily have to be negative. These results suggest that the impacts, if any, of cognitive biases are complex and context-dependent, warranting careful case-by-case investigation Manuscript Abstract: There is widespread speculation that cognitive biases pose severe barriers for humankind’s ability to engage in climate change mitigation. However, the real-life significance of such effects is a matter of debate, and is likely to be subject to the bias-modifying factor culture. The claims nonetheless imply a testable hypothesis: higher levels of cognitive biases should be predictive for lower willingness to pay (WTP) for climate change mitigation measures in a variety of settings including revealed or stated preference approaches. This study tests this hypothesis using a stated preference approach with university students from Germany and Indonesia. Our analysis proceeds in two steps, beginning with measuring four cognitive biases in each participant using a battery of pre-tested psychological scales. We subsequently implement a contingent valuation experiment eliciting WTP to mitigate sea level rise, allowing us to examine how WTP varies with the extent of cognitive bias. The results provide limited support for the hypothesis. Two of the four biases examined – Risk-Seeking in Losses and Present Bias – do not significantly predict WTP. Loss aversion is a (moderate) negative predictor in the German sample, whereas Positive Illusion is a positive predictor in the Indonesian sample. Summarily, cognitive biases predict mitigation behaviour; however, only in a minority of cases, and where they do, the prediction does not necessarily have to be negative. These results suggest that the impacts, if any, of cognitive biases are complex and context-dependent, warranting careful case-by-case investigation