Mental accounting is impacting sustainable behavior

Date:
October 13, 2020
Source:
Universite' de Gene`ve
Summary:
Human beings tend to create separate mental budget compartments
where specific acts of consumption and payments are linked. This
mechanism can be counter-productive when it comes to energy
consumption and can have a negative impact on attempts to reduce
carbon emissions. Psychologists have linked theories and research on
mental accounting to energy and sustainability behavior, proposing
concrete strategies to improve the impact of climate-control
measures.



FULL STORY ========================================================================== Mental accounting is a concept that describes the mental processes we
employ to organise our resource use. Human beings tend to create separate mental budget compartments where specific acts of consumption and payments
are linked. This mechanism can be counter-productive when it comes to
energy consumption and can have a negative impact on attempts to reduce
carbon emissions. Psychologists from the University of Geneva (UNIGE),
working in collaboration with the University of Applied Sciences and Arts
in Western Switzerland (HES-SO Valais), have published a perspective in
the highly influential journal Nature Energy.

The article links theories and research on mental accounting to energy
and sustainability behaviour, proposing concrete strategies to improve
the impact of climate-control measures.


========================================================================== Mental accounting, a concept known by psychology researchers since the
1980s, describes how the human mind functions when performing acts of consumption. For instance, someone who has bought a cinema ticket in
advance but who cannot find it on entering the cinema will typically
not buy a second ticket: their film budget has already been spent! This
example illustrates our tendency to mentally segment our budgets and
link them to specific acts of consumption.

"These basic cognitive mechanisms can help us better understand
unsustainable behaviour. If they are taken into account, they could
be used to fine-tune the way policy instruments are designed to fight
climate change, improve prevention and promote sustainable behaviour,"
begins Tobias Brosch, professor in psychology of sustainable development
at UNIGE's Faculty of Psychology and Educational Sciences and the Swiss
Centre for Affective Sciences. "For this article, we used the currently
ongoing discussions around the carbon tax to illustrate the impact of
three mechanisms of mental accounting on behaviour and to propose ways
to circumvent this impact." Justifications, rebounds and labels The
spillover effect refers to the fact that we tend to justify one behaviour
by another of our behaviours. "Someone who makes the effort to cycle to
work every day will use this argument to justify, to himself or others,
buying a plane ticket to go on holiday to the Seychelles. A possible intervention strategy to prevent this is to encourage people to create differentiated mental accounts using targeted messages," states the psychologist.

The rebound effect explains how actions can induce a negative energy
balance when people fail to adapt their budgets to a new situation. For example, people who buy an energy-efficient car may feel inclined to use
it more often, cancelling out potential energy savings. To tackle this phenomenon, the psychologists suggest informing people about the real
energy costs of their new car so they can update their consumption budget.

Our minds create mental accounts with precise labels. The mental account
that is opened when we receive a sum of money in a specific context
determines what the money will be spent on. "A monetary gift received
for a birthday will be labelled 'pleasure', and will most likely be
spent on pleasurable experiences," says Professor Brosch by means of illustration. This can be problematic in the context of sustainable decision-making. For instance, the financial returns on solar panels
installed at home appear only indirectly in the electricity bill and are
not explicitly labelled as "energy saving." Accordingly, people will
not necessarily think about reinvesting this money in new sustainable
measures.

"Clear labels are needed. In Switzerland, part of the carbon levy is
returned to citizens via a reduction in health insurance costs. It
would be better to label such an income 'Climate action revenue',"
argues Tobias Brosch.

Take the right measures but don't forget your values The analysis carried
out by the psychologists proposes concrete measures aimed at the political sphere so that pro-climate initiatives can be improved by factoring
in human behaviour. "We need to clearly show the price of energy, make
the message salient, and demonstrate the impact of consumption on CO2- emissions through concrete feedback," summarises Ulf Hahnel, senior
researcher at UNIGE and first author of the study.

The approaches developed in the perspective help conceptualise spending
and diversify mental accounts so that individuals can better adapt their behaviours. But Hahnel warns: "Be careful to consider your values and
not to fall into purely marketing-based initiatives. You cannot put sustainability labels on just any tax credit." "Bounded rationality,
including mental accounting, can help introducing innovative policies
for climate change mitigation in addition to price-oriented ones" adds Valentino Piana, senior economist at HES-SO, who contributed to the
study. Professor Brosch concludes in the same tone: "Our work helps to understand behaviour, how humans make choices and take decisions. Our
goal isn't to abolish free will, but to provide a behavioural
toolbox. Policymakers can use this knowledge to develop strategies based
not just on scientific evidence, but also on ethical considerations."

========================================================================== Story Source: Materials provided by Universite'_de_Gene`ve. Note:
Content may be edited for style and length.


========================================================================== Journal Reference:
1. Ulf J. J. Hahnel, Gilles Chatelain, Beatrice Conte, Valentino Piana,
Tobias Brosch. Mental accounting mechanisms in energy
decision-making and behaviour. Nature Energy, 2020; DOI:
10.1038/s41560-020-00704-6 ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2020/10/201013124129.htm

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