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The Role of the Economics tuition in Protecting the Environment

Protecting the environment is essential, as evidenced by rising temperatures, melting glaciers, the disappearance of animal species, etc. For economists, this question really took shape in the middle of the 20th century.

Various economics Tuition has gradually been offered to public decision-makers, some of which are integrated into public policies. Now, with advances in other disciplines, and particularly in psychology, economists are increasingly turning to non-monetary incentives. But the question of their effectiveness arises …

It is possible to identify four reasons for the implementation of an environmental policy: the cost of pollution due to human activity; environmental protection understood as a public good game where everyone has an interest in letting others act and not contributing; Beyond improving environmental quality, political measures, particularly through taxes, are a source of income for the State; inter-generational solidarity: to encourage the present generations so that future generations benefit from it.

From The Point of View of Environmental Policies

An incentive consists in the establishment of a political measure aimed at modifying the behavior of individuals. This action is necessary because most economics tuition agents do not take into account the impact of their activity on the environment or externality. An externality is defined as a priceless effect of the activity of one agent on others. Thus, the main objective of an environmental incentive policy will be the correction of an externality by modifying behavior. To this end, governments have at their disposal monetary (taxes, subsidies, permits) and non-monetary (nudges (simple, non-binding and inexpensive actions) incentive tools, motivation, education).

Monetary incentives Economics Tuition

It was not until the 1920s when the British economist Arthur Cecil Pigou is the first to propose an internalization of externalities economics tuition, known today under the name of Pigouvian tax or coax. Through taxes or subsidies, the State must intervene to compensate for the difference between the private cost and the cost to society (collective cost). Government measures based on the Pigouvian tax are numerous: tax on eco-participation, internal consumption tax on petroleum products (TIPP), bonus/penalty system linked to the purchase of a new vehicle (combination tax/grant).

The implementation of such a tax requires perfect information on the external costs and benefits, at the risk for the public authorities of a budget imbalance: this was the case with the bonus/mauls policy implemented in France. in 2008 and whose scales were revised in 2018 following poor anticipation of the reaction of consumers, who took advantage of the offer in numbers much higher than expected, which led to an increase in the cost borne by the State.

This Pigouvian tradition of price incentives (polluter pays principle) dominated the public economics tuition until the 1960s when it was challenged by another British economist, Ronald Cease. (1960), in favor of an incentive by quantities based on the distribution of property rights on the externality. Cease considers that the agents, by exchanging these rights, will arrive at an optimal allocation equalizing the marginal cost of one to the marginal benefit of the other. The two best-known applications of Cease’s argument are the SO2 (sulfur dioxide) emissions permit market in the United States established in 1990 and the greenhouse gas emissions market in the United States. European Union from 2005

The Objective of Pigou or Cease Regulations Is to Encourage Individuals to Adopt Pro-Environmental Behaviors

However, the price of fossil fuels is not high enough to trigger an energy transition, in other words, the incentives are not strong enough. With the emergence of environmentalist movements and the rise of environmental problems, the issue of incentives has grown considerably. Thus, the third type of regulation will emerge, effective and realistic, based on second-rate solutions: the objective will be to minimize the collective cost of pollution control for a given level of exogenous externality. This type of regulation has been in place in the European Union since 1990 with standards for the emission of pollutants other than CO2 for cars.

The effectiveness and fairness of the three previous types of incentives vary depending on the context and sometimes require the adoption of a “hybrid” incentive, such as the establishment of a CO2 emissions permit market combined with a floor price. However, the reaction of consumers following the adoption of incentives is poorly informed, their study is limited to the consideration of rational individuals pursuing their personal interest and not making it possible to explain the effectiveness of the failure of the incentive. certain measures: for example, the coax on electronic equipment works well while that on heavy goods vehicles has experienced massive rejection. New forms of environmental incentives and regulation take into account behavioral biases and psychological factors.

Non-Monetary Incentives

Since the 2000s, a new form of regulation has appeared through nudges (Thales, Sun stein, 2008). “A nudge is a simple, inexpensive or inexpensive action (both in its implementation and to avoid it), and non-binding, the goal of which is to guide individuals so that they make decisions that improve their well-being. be or, more generally, that of society as a whole. This action may involve the use of psychological biases (particular presentation of the different options, default option, etc.) or may take the form of information given to individuals to trigger awareness”.

Despite the criticisms addressed, in particular in terms of ethics, regarding their manipulative and paternalistic aspect, their simplicity of implementation, and their low cost, make nudges a privileged instrument in the context of environmental regulation. Thus, many everyday measures call on them, such as the dematerialization of administrative documents or the change of packaging for detergents. However, the reaction of agents to their implementation is difficult to predict with any certainty, since it depends essentially on psychological factors such as motivation or the existence of social norms.

An Essential Aspect in The Analysis of the Choices of Individuals Is Motivation economics tuition

The theories of motivation make it possible in particular to explain – at least in part – the limits encountered by traditional incentives. Indeed, there are many behaviors in which psychosocial motivations (generosity, conformism, morality, etc.) take precedence over purely monetary motivation, skewing cost/benefit calculations, classic in economics tuition. This comes from the dual aspect of motivation (Deco, 1975): on the one hand, there is an extrinsic motivation linked to monetary penalties which are part of the context in which the individual makes his decisions; on the other hand, there is an intrinsic motivation specific to each individual.

The dominance of one or the other of these motivations conditions the effectiveness of pro-environmental policies. These must first identify the existence of internal motivation in order to determine the most effective measures to influence the behavior of individuals. This is, for example, the case for the prevention of waste where through informational and financial mechanisms, the individual adopts a behavior going in the direction of the collective interest while satisfying his personal interest.

Are The Incentives Effective in economics tuition?

Despite the existence of incentive tools, adopting pro-environmental behavior is not automatic. Consequently, according to UNESCO (2014), education appears to be an effective course of action to change behavior. It plays an incentive role through the acquisition of knowledge, the objective of which is to increase the overall number of individuals adopting pro-environmental behavior as well as the number of “green” actions per individual.

Finally, we must take into account the institution at the origin of the incentive measure as well as the relationships between incentive, motivation, and institution. Indeed, the targeted individuals are sensitive to the nature and proximity of the institution implementing the measure. For this to be effective, it is necessary, on the one hand, to obtain the support of the agents concerned and that the expected results do not differ significantly from those obtained; and on the other hand, that the institution which implements it is credible and obtains the confidence of the agents.

 

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