Immediate Green Gratification

Smaller gains sooner mean more to people than big benefits later.  

The manner in which we make decisions about future financial gains and losses is similar to how we engage in environmental planning, says research from Columbia University. People manage their money in the same way they make decisions about their environmental planning, the study, funded by the National Science Foundation, revealed.

“People tend to discount the future and overvalue the present,” lead researcher David Hardisty, M.Phil tells demo dirt. “If you want people to make choices to benefit the future, show them a benefit that is immediate. For example, there may be a social benefit of  everyone agreeing to something, or in economic terms, if people weatherize their homes, although that has an immediate cost, the benefits are long-term. You can have a finance program offered by a utility company or local government for long-term benefits right away.” 

“People need an immediate incentive for long term payoff,” he adds.  

Hardisty, who was always interested in environmental issues, was inspired to examine the link between how we make financial decisions and green planning when he came to Columbia and discovered research on decision-making and how people place value on things.  

“The majority of studies have been about money because it is easier to study in the lab so I was wondering how people make environmental decisions,” he explains. “I thought it would be interesting to explore, because there was little in the literature about this issue.” 

The research consisted of three studies with 65, 118, and 146 participants, respectively. Participants were asked to make choices involving various long-term versus short-term scenarios, including issues on air quality, mass transit, garbage pile-up from a workers’ strike, and monetary loss or gain. Researchers measured the discount rate—how much people downplay the impact of future events—in each scenario. 

Results indicated that participants were more likely to choose small immediate gains over larger long-term gains. For example, more people would rather have 21 days of clean air now rather than 35 days of clean air next year, a short-term fix for mass transit now instead of a long-term solution later, and a $250 dollar lottery win now over a $410 win a year from now. 

Citing loss aversion theory, Hardisty explains that people prefer to avoid loss rather than acquire gains. “Loss feels bad more than gain feels good,” he says. “It is compounded when it is explained in terms of a situation over time. People discount gains more than they discount losses; future losses are more important than future gains.” 

To promote green choices, environmentalists should frame the issues within the context of avoiding current losses. For example, to encourage purchases of an earth-friendly, energy-efficient washing machine, stating that it will save consumers $50 more per year in the future will not be as effective as telling them that they will avoid losing $50 a year for the next several years. 

“People discount losses less than gains,” Hardisty notes. “Rephrase it as, ‘You are losing money now; you will lose $50 a year for next several years.’ By phrasing in terms of avoiding losses rather than making gains it is more effective.” 

When it comes to policy planning, the researcher notes, results also indicated that when it comes to fixing environmental woes, the public cannot necessarily be trusted to make decisions about such important issues. 

“Some people would say one way to choose policies is to ask people, because we live in a democracy, so poll the public to place a value on the future environmental resources,” he says. “Results of our study say that is a bad idea, because people are just too focused on the present—they are too impatient—they discount the future.” 

“Sadly you cannot just poll the public to find out what to do about climate change,” Hardisty maintains. “It needs to be decided by experts even though it is not democratic. With a medical problem you ask the doctor, you don’t poll the public.”