Public Opinion, Prospect Theory and Climate Change

A good deal of criticism has been aimed at the Bush Administration's refusal to ratify the Kyoto Protocol and its general reluctance to support policies that would reduce greenhouse gas emissions in the United States. That crticism might be better aimed elsewhere, at the American public.

What do Americans really think about climate change and the types of policies that should be adopted to mitigate its potential impacts?

According to a recent Gallup poll report,

"40% of Americans said last April (April 2000) that they worry about the problem "a great deal," 32% said they worry "a fair amount," 15% said "only a little" and 12% expressed no worry at all. To put that finding in context with other environmental problems tested, more than half of Americans worry "a great deal" about various types of water pollution (drinking – 72%, river/lake – 66%, ocean – 54%), as well as air pollution (59%), and soil contamination (64%)."

So, comparatively speaking, Americans worry a lot less about climate change than they worry about other environment issues. Contrary to what many environmental groups want you to believe, there is a rational tendency among the American public to avoid supporting climate change mitigation policies because they believe those policies would hurt them economically in the short term.

Will this hesitancy among the American public to support climate mitigation policies ever change? The answer, of course, is yes. However, the real issue is trying to determine when it will change.

Opinion Formation

One aspect of understanding public opinion on any public policy issue, including climate change policy, starts with understanding the decision making process. Political analysts use a variety of models to describe individual decision making and perhaps some of the most popular are grounded in theories of economic rationality.

People vote their pocket book, so the almost now axiomatic saying in the voting studies literature goes. The strength of the economic models is that they assume, and to a large degree, demonstrate in real life experiences, that individuals, considering their opinions on a policy topic, form a simple to complex cost benefit analysis during their decision making process. In short, these models show that individuals tend to support environmental policies where they stand to gain.

Most economic models of decision making applied to climate change policy would start by assuming individuals ask themselves a series of questions throughout the decision making process.

• How real is climate change?
• What types of problems are associated with climate change?
• If climate change is real, would I be willing to pay more for a gallon of gasoline to help alleviate the problem?
• Do I want to potentially pay more for renewable electricity to help control greenhouse gas (GHG) emissions?
• Would I be willing to support or use a tax credit policy aimed at promoting a cleaner automobile industry?

After asking their questions, individuals then go through a series of mental calculations weighing the costs and benefits associated with them and roughly make a decision on the types of climate change policies they would or would not support.

Prospect Theory

A model based on economic rationality, called Prospect Theory, developed by two Stanford researchers (Quatttrone, George and Amos Tversky. 1998. "The Structure of Emotional Response: 1984 Presidential Candidates." American Political Science Review 82(3). 719-736), provides insight into the state of public opinion on climate change.

Simply stated, prospect theory is based on the idea of context. People make decisions within the context of definable and measurable parameters. In other words, they make decisions depending on their prospects. If you change the context in which decisions are made, individuals change their risk orientation, which in turn causes changes in public opinion. Consider the graph below.

FIGURE 1

The curve at the top, the blue curve is a simple Bernoulli Curve which is built on two assumptions.

• 1. Individuals use a final value calculus as a decision making baseline.
• 2. Individuals experience a sense of diminishing returns with respect to their value calculus. (i.e., individuals gain more units of satisfaction when they gain $1 at a $20 level than the units of satisfaction they gain when they gain $1 at a $1,000 level.

Economists have long assumed that under these conditions, individuals assume a risk adverse mentality meaning they generally believe that it's not worth the risk to make a change.

In the public opinion arena, this risk adverse mentality often translates into public support for status quo policies. For example, with respect to air policy, risk adverse individuals would support policies close to the status quo for automobile emissions regulations and industry emissions regulations.

Of course individuals do change their minds and sometimes they do so in a rational manner because circumstances change. The bottom portion of Figure 1, the red curve represents an economic model of individual decision making by individuals in a “loss game” rather than the now standard “gain game” assumed under the Bernoulli Curve.

The curve on the bottom shows that individuals using the same value calculations, only this time coming up with negative values, tend to change their risk orientation. In games of loss, individuals assume a risk seeking preference. In everyday terms, these assumptions mirror a common rational used by people taking risks, “I’ve got nothing to lose”. They’re often thinking that if they stay with the status quo, they are bound to lose. The steeper curve implies a unit more of a loss hurts more than a unit more of gain provides satisfaction (pain hurts more than pleasure feels good).

With respect to public opinion and climate change, individuals fitting the ‘loss game’ scenario are those that arrive at negative results during their decision making calculus.

What the model shows us is that public opinion on climate change policies will change as time and circumstances change. As science mores toward greater certainty about the impacts of climate change, such as how unusually long term drought conditions or excessive heat conditions will affect specific segments of the population, the model suggests that public opinion will move to the “loss game” scenario. Individuals will decide that absent action on climate change, they stand to lose and therefore will support climate mitigation policies.

© 2003. Patricia A. Michaels. All Rights Reserved.