When examining environmental, energy, and climate change policy, the methods and the topic of behavioral economics arise with some regularity. In my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” we’ve talked about such behavioral research in regard to energy-efficiency policies with Michael Greenstone and others. And, much more recently, in a podcast episode just released, I had the opportunity to talk with a behavioral economist who is now on the faculty of a school that’s focused on environmental studies. I’m referring to Hunt Allcott, who is Professor of Global Environmental Policy at the Doerr School of Sustainability at Stanford University, and who – I’m proud to say – is a graduate of the PhD program in Public Policy at Harvard. You can listen to our podcast conversation, produced by the Harvard Environmental Economics Program, here.
Allcott serves as Co-Director of the Stanford Environmental and Energy Policy Analysis Center, and is a Research Associate at the National Bureau of Economic Research, as well a member of the board of editors of the American Economic Journal: Economic Policy.
The crux of Allcott’s research focuses on the ways in which human behavior affects economic decisions and outcomes in a variety of contexts, and the lessons those have for policymaking. In our conversation, he cites several examples where government policy can influence consumer decisions in ways that will benefit both consumers and the environment.
“It’s like what behavioral economists call a shrouded attribute. It’s a future cost that’s kind of easy to forget when you’re making a purchase decision. So, if it’s… true that consumers aren’t thinking very hard about these future energy costs, then we’re probably erring on the side of buying too many gas guzzling cars and energy guzzling air conditioners and light bulbs. And so, as a result, the government can make us better off by pushing us in the direction of being more energy efficient,” Allcott remarked. “It was fun for me to… work with a group of others to develop actual empirical tests of, okay, how would you substantiate those consumer protection arguments in the data? So, that’s some of the work that I’m most proud of.”
Allcott also discusses the federal electric vehicle tax credits, which are designed to incentivize consumers to reduce carbon emissions.
“You subsidize a new electric vehicle, that’s a new EV on the road, [and] that’s good for the environment in most places. You give somebody a tax credit to buy a used EV, that’s just trading an electric vehicle from one person to another, and so there’s no new net vehicle on the road, at least [not] directly,” he stated. “Is the incidence really on the used vehicle buyer, in which case there’s no environmental benefit, or maybe the prices of used electric vehicles are going up because they’re worth more upon resale. That’s not as good for the buyers, but then it might induce more new electric vehicle sales because when you buy a new EV, you then recognize that the resale value might be higher.”
Allcott officially joined the faculty at the Doerr School in September 2022, just as the school was being launched.
“There are 60 existing faculty members that were moved into that school as part of earth systems, energy systems, civil engineering, and some other departments. I was actually… the first external hire of this school to reach through the provost and actually show up on campus. And so, I’ve been here for, I guess, 15, 16 months so far, and it’s just been a great experience trying to help Stanford have an even bigger imprint in this space of impact on energy and environmental issues.”
Ironically, Allcott notes that much of the research taking place at the Doerr School and in which he’s now engaged is not focused on behavioral economics.
“This has been an opportunity to step back and rethink what is the right research direction for the next five to ten years. And perhaps interestingly, all the topics that our group is now working on are what I would call non-behavioral topics. There’s not really a behavioral economics angle to them,” he explained. “Upon arriving at Stanford [I asked] ‘okay, I’m in the sustainability school. What are the most important environmental economics topics?’ I think energy efficiency and behavioral economics is still on that list, but there’s so much other stuff. There’s the Inflation Reduction Act, there is electricity market design, and then within each one of those two, there’s a lot of different sub-areas that we’re actually focusing on.”
You can hear this and much more in my conversation with Hunt Allcott, which is the 59th episode over the past four years of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:
- Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
- Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
- Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
- Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
- Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
- David Keith, professor at Harvard and a leading authority on geoengineering
- Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
- Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
- Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
- Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
- Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
- Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
- David Hone, Chief Climate Change Adviser, Shell International.
- Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
- David Victor, professor of international relations at the University of California, San Diego.
- Lisa Friedman, reporter on the climate desk at the The New York Times.
- Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
- Spencer Dale, BP Group Chief Economist.
- Richard Revesz, professor at the NYU School of Law.
- Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
- William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
- Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
- John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
- Gernot Wagner, Clinical Associate Professor at New York University.
- John Holdren, Research Professor, Harvard Kennedy School.
- Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
- Suzi Kerr, Chief Economist, Environmental Defense Fund.
- Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
- Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
- Gilbert Metcalf, Professor of Economics, Tufts University.
- Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
- Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
- Maureen Cropper, Distinguished University Professor, University of Maryland.
- Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
- Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
- Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
- Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
- Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
- Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
- Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
- Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
- Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
- Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.
- James Stock, Harold Hitchings Burbank Professor of Political Economy, Harvard University.
- Mary Nichols, long-time leader in California, U.S., and international climate change policy.
- Geoffrey Heal, Donald Waite III Professor of Social Enterprise, Columbia Business School.
- Kathleen Segerson, Board of Trustees Distinguished Professor of Economics, University of Connecticut.
- Meredith Fowlie, Professor of Agricultural and Resource Economics, U.C. Berkeley.
- Karen Palmer, Senior Fellow, Resources for the Future.
- Severin Borenstein, Professor of the Graduate School, Haas School of Business, University of California, Berkeley.
- Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration, Harvard Business School.
- Emma Rothschild, Jeremy and Jane Knowles Professor of History, Harvard University.
- Nathaniel Keohane, President, C2ES.
- Amy Harder, Executive Editor, Cypher News.
- Richard Zeckhauser, Frank Ramsey Professor of Political Economy, Harvard Kennedy School.
- Kimberly (Kim) Clausing, School of Law, University of California at Los Angeles
“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.
