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Journal of Social Issues, Vol. 63, No. 1, 2007, pp. 21--39 Judgmental Discounting and Environmental Risk Perception: Dimensional Similarities, Domain Differences, and Implications for Sustainability Alexander Gattig ∗ University of Bremen Laurie Hendrickx University of Groningen Environmental risks constitute a special category of risks because they often involve consequences that are highly uncertain, strongly delayed, occurring at distant places, and—therefore—mostly borne by others. Economic, decision–theoretic, and psychological research about the way people deal with such consequences is reviewed. Two major findings are presented: first, there is evidence that discounting mechanisms are stable across different preference dimensions (uncertainty, temporal, spatial, and social distance). Second, discount rates tend to vary across different problem domains (e.g., environmental vs. health vs. financial risks). In particular, it appears that temporal discounting is less pronounced for environmental risks than in other domains. Several factors are identified that affect the nature of the risk evaluation process, and it is argued that environmental risks differ from other risks on such factors. These environmental-risk characteristics may have important implications for policy strategies to promote environmental sustainability. Contrary to other domains, appealing to the public’s long-term preferences may be successful. Also in policy making, insights from standard economic decision theory to environmental decision making should be applied with caution. Environmental Risks and Discounting Processes Understanding how people perceive, evaluate, and deal with environmental risks is essential for achieving environmental sustainability. People’s environmentally ∗Both authors contributed equally to this paper. Correspondence concerning this article should be addressed to Alexander Gattig, Jean Monnet Centre for European Studies CEuS, University of Bremen, SFG, Enrique-Schmidt-Strasße 7, 28359 Bremen, Germany. [E-mail: gattig@empas.uni-bremen.de]. 21 C○ 2007 The Society for the Psychological Study of Social Issues

Journal of Social Issues, Vol. 63, No. 1, 2007, pp. 21--39<br />

<strong>Judgmental</strong> <strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong><br />

<strong>Perception</strong>: Dimensional Similarities, Domain<br />

Differences, <strong>and</strong> Implications for Sustainability<br />

Alex<strong>and</strong>er Gattig ∗<br />

University of Bremen<br />

Laurie Hendrickx<br />

University of Groningen<br />

<strong>Environmental</strong> risks constitute a special category of risks because they often involve<br />

consequences that are highly uncertain, strongly delayed, occurring at distant<br />

places, <strong>and</strong>—therefore—mostly borne by others. Economic, decision–theoretic,<br />

<strong>and</strong> psychological research about the way people deal with such consequences is<br />

reviewed. Two major findings are presented: first, there is evidence that discounting<br />

mechanisms are stable across different preference dimensions (uncertainty,<br />

temporal, spatial, <strong>and</strong> social distance). Second, discount rates tend to vary across<br />

different problem domains (e.g., environmental vs. health vs. financial risks). In<br />

particular, it appears that temporal discounting is less pronounced for environmental<br />

risks than in other domains. Several factors are identified that affect the nature<br />

of the risk evaluation process, <strong>and</strong> it is argued that environmental risks differ from<br />

other risks on such factors. These environmental-risk characteristics may have important<br />

implications for policy strategies to promote environmental sustainability.<br />

Contrary to other domains, appealing to the public’s long-term preferences may<br />

be successful. Also in policy making, insights from st<strong>and</strong>ard economic decision<br />

theory to environmental decision making should be applied with caution.<br />

<strong>Environmental</strong> <strong>Risk</strong>s <strong>and</strong> <strong>Discounting</strong> Processes<br />

Underst<strong>and</strong>ing how people perceive, evaluate, <strong>and</strong> deal with environmental risks<br />

is essential for achieving environmental sustainability. People’s environmentally<br />

∗Both authors contributed equally to this paper. Correspondence concerning this article should be<br />

addressed to Alex<strong>and</strong>er Gattig, Jean Monnet Centre for European Studies CEuS, University of Bremen,<br />

SFG, Enrique-Schmidt-Strasße 7, 28359 Bremen, Germany. [E-mail: gattig@empas.uni-bremen.de].<br />

21<br />

C○ 2007 The Society for the Psychological Study of Social Issues


22 Gattig <strong>and</strong> Hendrickx<br />

relevant behaviors <strong>and</strong> their support for policy measures aimed at environmental<br />

sustainability depend—among other factors (see Lindenberg & Steg, this issue)—<br />

on the extent to which they consider environmental problems, such as air pollution,<br />

soil contamination, or global warming, to be a risk. In this article the term risk<br />

refers to a situation or development that may result in negative consequences. 1<br />

However, environmental risks seem to constitute a special category of risks.<br />

They often are characterized by high levels of uncertainty, by strongly delayed consequences,<br />

<strong>and</strong> by consequences that occur at distant places <strong>and</strong> are—therefore—<br />

borne by others. All of these aspects may result in a discounting of such risks;<br />

that is, such risks are taken less seriously than risks with negative outcomes that<br />

occur for sure, now, here, <strong>and</strong> to us. When dealing with environmental risks, it is<br />

frequently necessary to balance benefits that occur for sure, immediately, here, <strong>and</strong><br />

to ourselves against losses that are uncertain, delayed, might occur elsewhere, <strong>and</strong><br />

to others. Heavily discounting such losses (i.e., considering them as less serious)<br />

may result in decisions <strong>and</strong> behaviors that are incompatible with environmental<br />

sustainability.<br />

The difficult relationship between sustainability <strong>and</strong> discounting processes is<br />

captured in the commons dilemma paradigm (see also Vlek & Steg, this issue).<br />

In the so-called tragedy of the commons (Hardin, 1968) several farmers share a<br />

piece of grassl<strong>and</strong>. Each farmer has an incentive to add cattle to this grassl<strong>and</strong><br />

because (s)he solely reaps the benefits (his/her cattle is nourished) while the costs<br />

(depletion of the l<strong>and</strong>) are borne by all farmers. Here, realizing sure short-term<br />

benefits occurring directly to the decision maker results in an overexploitation of<br />

the commons, eventually leading to its ruin in the long run.<br />

Human decision-making centers on outcomes that occur to us, here, now, <strong>and</strong><br />

for sure. Consequences that deviate in one or more of these aspects are valued<br />

less, that is, they tend to be discounted. When dealing with environmental risks<br />

in general <strong>and</strong> common-pool resources in particular, often such consequences<br />

are involved (see Jager & Mosler, this issue, for an elaboration <strong>and</strong> for examples<br />

showing how these consequences may affect behavior). For instance, in the tragedy<br />

of the commons benefits do occur here <strong>and</strong> now, for sure, <strong>and</strong> directly to the<br />

decision maker, while costs to a large extent are delayed, unsure, <strong>and</strong> borne by<br />

others. Hence, discounting potentially complicates dealing with environmental<br />

risks in general <strong>and</strong> it worsens the tragedy of the commons. In this article we<br />

investigate <strong>and</strong> compare the discounting processes involved in such environmental<br />

risk evaluations <strong>and</strong> we explore their implications for environmental sustainability.<br />

1 In the economic <strong>and</strong> decision-theoretic literature the term risk is reserved for cases where either<br />

positive or negative outcomes occur with a probability that is known by the decision maker. Uncertainty<br />

on the other h<strong>and</strong> refers to choices where these probabilities are unknown. Contrary to this use – <strong>and</strong> in<br />

line with what is customary in risk perception research – we speak of a risk when we refer to situations<br />

that may result in negative outcomes <strong>and</strong> we consider uncertainty to be a preference dimension, that<br />

is, an outcome characteristic that affects people’s preferences.


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 23<br />

Generalizability of <strong>Judgmental</strong> <strong>Discounting</strong> Across Dimensions<br />

Much research, mostly in economics <strong>and</strong> psychology, has been devoted to<br />

the study of how people perceive, evaluate, <strong>and</strong> deal with uncertainty. In the last<br />

two decades, research on intertemporal choices has also flourished, again mainly<br />

in psychology <strong>and</strong> economics. For both preference dimensions, that is, outcome<br />

characteristics that affect people’s preferences (see note 1), st<strong>and</strong>ard economic<br />

theorizing has yielded a set of normative requirements (axioms) whose acceptance<br />

by the decision maker implies rational, outcome-maximizing behavior. However,<br />

a plethora of empirical studies has revealed violations of the axioms underlying the<br />

respective models, as well as of their implications (for overviews see Frederick,<br />

Loewenstein, & O’Donoghue, 2002; Kahneman & Tversky, 1979; Tversky &<br />

Kahneman, 1992). Economists call such deviations of (implications of) the st<strong>and</strong>ard<br />

economic theory anomalies.<br />

In response to these empirical challenges, several attempts were undertaken<br />

to develop descriptive theories accounting for anomalies with regard to choices involving<br />

uncertainty <strong>and</strong> with regard to choices involving temporal delay. However,<br />

although the nature of the axiomatic systems underlying the st<strong>and</strong>ard economic<br />

theories on uncertainty <strong>and</strong> temporal delay is very similar, few authors have taken<br />

into account the similar nature of the observed anomalies (e.g., Prelec & Loewenstein,<br />

1991; Quiggin & Horowitz, 1995), have generalized empirical results to<br />

other preference dimensions (e.g., Björkman, 1984; Rachlin & Rainieri, 1992),<br />

or have imported insights from other domains into their own field of interest (see<br />

Laibson, 1997, for an exception).<br />

In the majority of both economic <strong>and</strong> psychological studies, subjects were<br />

asked to choose between varying amounts of money available either with different<br />

probabilities <strong>and</strong>/or at different points in time. Typical examples are choice options<br />

such as “What would you prefer: (A: an amount x with a probability of .5 in 4 weeks)<br />

or (B: an amount x/2 for sure now)?” Although the majority of studies involve<br />

hypothetical choice situations, their main findings were confirmed in studies that<br />

used real rewards <strong>and</strong> real choices (e.g., Kachelmeier & Shehata, 1992; Kagel &<br />

Roth, 1995, provide an overview <strong>and</strong> a discussion concerning the robustness of<br />

such experiments).<br />

Two other preference dimensions that may affect people’s risk perception <strong>and</strong><br />

evaluation are the spatial <strong>and</strong> social distance of the negative outcomes. However,<br />

research about the role of these dimensions in environmental risk perception <strong>and</strong><br />

decision making is sparse. Sociologists <strong>and</strong> psychologists have developed several<br />

conceptions of social distance (see already Bogardus, 1959) <strong>and</strong> social comparison<br />

but provided few links to choice behavior. Research on social orientation <strong>and</strong> its<br />

consequences for choices in social dilemmas (e.g., Liebr<strong>and</strong>, Messick, & Wilke,<br />

1992) <strong>and</strong> on the effect of altruism in ultimatum games (Charness & Rabin, 2002)<br />

has been carried out rather extensively by psychologists <strong>and</strong> economists alike, but


24 Gattig <strong>and</strong> Hendrickx<br />

these findings are generally not related to environmental decision making or the<br />

commons dilemma. However, some links have been made, mainly in research on<br />

risk perception, between the discounting of spatially distant outcomes <strong>and</strong> decision<br />

theory (see Vlek & Keren, 1992, for an overview). Although Vlek <strong>and</strong> Keren<br />

suggest that the utility of spatially distributed outcomes could be assessed in a way<br />

similar to the assessment of temporally distributed outcomes, they (1992, p. 267)<br />

state: “Decision–theoretic research on spatial dilemmas <strong>and</strong> preferences is highly<br />

underdeveloped.” Recently, research interest with respect to this area has risen<br />

<strong>and</strong> problems like the not-in-my-back-yard (NIMBY) phenomenon have received<br />

considerable attention, for instance by Frey, Oberholzer-Gee, <strong>and</strong> Eichenberger<br />

(1996).<br />

The only research on discounting in which uncertainty, temporal delay, spatial<br />

distance, <strong>and</strong> social distance were studied simultaneously was conducted by<br />

Gattig (2002, Chapter 7). There, subjects repeatedly chose between two options,<br />

each of which consisted of a monetary outcome 2 <strong>and</strong> some value on one of the<br />

four outcome dimensions studied (uncertainty, temporal delay, spatial distance,<br />

<strong>and</strong> social distance). The first three outcome dimensions could be easily quantified,<br />

by providing subjects with information, respectively, about the probability,<br />

temporal delay, <strong>and</strong> spatial distance of the outcome. In contrast, social distance<br />

does not easily lend itself to such quantification. Gattig (2002) created fictive<br />

characters, defined by five important though not exhaustive characteristics: age,<br />

socioeconomic status, hobbies, nationality, <strong>and</strong> political orientation. Numerical<br />

social distance scores depended on how much each character differed from the<br />

“average subject” for all five characteristics; the empirical validity of this assessment<br />

was checked <strong>and</strong> confirmed separately. Characters were supplemented by<br />

photos <strong>and</strong> differed for male <strong>and</strong> female subjects, male subjects being presented<br />

with male characters <strong>and</strong> female subjects being presented with female characters.<br />

To give an example, for male student subjects, the closest character was a 24-year<br />

old, left-wing student who played soccer. These attributes summed up to a specific<br />

number of points (the highest possible). The number of points attributed to other<br />

characters differed according to which <strong>and</strong> how many of these attributes were<br />

varied. Subjects were confronted with a variety of choices such as the following:<br />

Example of intertemporal choice:<br />

“Imagine you have to choose between the following two options:<br />

A) A loss of Dfl 100 in 8 weeks3 .<br />

B) A loss of Dfl 110 in 12 weeks.<br />

2 For the choice problems dealing with spatial distance, monetary rewards were replaced by supermarkets<br />

<strong>and</strong> small shops varying with respect to the number of items-in-store.<br />

3 Dfl refers to the Dutch currency before the introduction of the Euro (Dfl 100 ≈ €45).


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 25<br />

Which Option Do You Prefer?”<br />

Example of interpersonal choice:<br />

“Please read the descriptions of Willem (being presented as more similar to the<br />

subject) <strong>and</strong> Leo given in the appendix carefully. Imagine the following two events:<br />

A) Willem wins Dfl 150.<br />

B) Leo wins Dfl 200.<br />

Which Event Would You Prefer?”<br />

Within these choices monetary outcome values <strong>and</strong> the value of the outcome<br />

dimension studied were simultaneously varied in the following ways: monetary<br />

gains versus losses, multiplying both monetary outcome values with a common<br />

factor, adding a common constant to both monetary outcome values, multiplying<br />

the value of the outcome dimension in both options with a common factor, <strong>and</strong><br />

adding a common constant to the value of the outcome dimension in both options.<br />

In previous research on choice under uncertainty <strong>and</strong> intertemporal choice, these<br />

manipulations generally caused changes in preferences between options in the<br />

following ways (see Prelec & Loewenstein, 1991):<br />

a) Multiplying the value of an outcome–characteristic by a common factor in<br />

both options raises the importance of that characteristic for people’s choices<br />

(“common ratio effect”).<br />

b) Adding a common constant to the value of an outcome–characteristic in both<br />

options lowers the importance of that characteristic (“common difference effect”).<br />

c) Changing the value of an outcome-characteristic from positive to negative raises<br />

the importance of that characteristic (“sign effect”).<br />

Special cases of these regularities are the so-called certainty effect in choice under<br />

uncertainty <strong>and</strong> the immediacy effect in intertemporal choice: a decision maker<br />

is most sensitive to uncertainty <strong>and</strong> delay when they are introduced, that is, if an<br />

uncertain or delayed option is compared with a sure or an immediate option. If<br />

the same amount of uncertainty or the same delay is added to an already uncertain<br />

or delayed option, a decision maker’s behavior will be affected much less. Gattig<br />

(2002) demonstrated that these behavioral regularities apply to the discounting of<br />

uncertain, delayed, spatially, as well as socially distant outcomes. Moreover, the<br />

discount functions for the respective preference dimensions appear to have similar<br />

(negatively accelerated) forms. To give an example, Gattig (2002) reports substantial<br />

changes in preference when rewards became more delayed (56.4% preferred<br />

the sooner option when time delays were “now” <strong>and</strong> “in 4 weeks,” while 24.4%


26 Gattig <strong>and</strong> Hendrickx<br />

preferred this option when respective delays were 26 <strong>and</strong> 30 weeks). Similarly,<br />

31% preferred a socially closer character (“Willem”) to receive the higher amount<br />

of money, when both characters were close, but this figure dropped to 12.5% when<br />

both characters were more distant from the decision maker. However, the size of<br />

such effects is difficult to compare even within dimensions since they are strongly<br />

dependent on the specific scenarios used. For instance, in research on temporally<br />

delayed monetary outcomes, discount rates – that is, the percentual decrease in<br />

value per year of delay—vary from 3–4% per year (which appears rational given<br />

the usual market interest rates) to discount rates up to 345% per year (Frederick et<br />

al., 2002; Loewenstein & Thaler, 1989; Thaler, 1981). The only effect that appears<br />

to have a stable effect size is the sign effect in choice under uncertainty. Here,<br />

a reoccurring finding is that people consider losses twice as important as gains<br />

(Tversky & Kahneman, 1992).<br />

A final behavioral regularity in choices under uncertainty <strong>and</strong> choices involving<br />

temporal delay is the existence of framing effects. Kahneman <strong>and</strong> Tversky<br />

(1984) <strong>and</strong> Loewenstein (1988) demonstrated that options are evaluated against a<br />

reference point, for example current assets, which can be manipulated. Hence, the<br />

perception of outcomes as gains or losses depends on the way choice problems are<br />

formulated. Similarly, the perception of temporal delays can be framed as either<br />

speed-ups or delays. Thus, variations in problem formulations that affect the decision<br />

maker’s reference point may be used to make certain options more or less<br />

attractive. For example, when a decision maker adopts a situation with the absence<br />

of environmental risks as her or his reference point, (s)he will be more aversive<br />

to accept new environmental risks than if the new risk is perceived as an increase<br />

of an already existing risk. Similarly, when environmental risks are presented as<br />

losses (e.g., “Our situation is not too good but acceptable; we may try to improve<br />

things but then we run a risk of ending worse-off”) people will tend to avoid the<br />

risk. If, on the other h<strong>and</strong>, environmental risks are presented as gains (e.g., “We<br />

have a rather bad situation now, <strong>and</strong> this option might improve it. However, there<br />

is a risk that we end worse than we are now”), people will be more inclined to<br />

take or accept the risk. That is, environmental risks are more likely to be accepted<br />

when they are presented as gains than when presented as losses. While established<br />

firmly for decision making under risk <strong>and</strong> intertemporal choice, up to now such<br />

framing effects have not been demonstrated for choices involving spatial or social<br />

distance.<br />

To sum up, there is evidence that humans discount outcomes that are uncertain,<br />

temporally delayed, spatially distant, <strong>and</strong>/or occurring to others. The discounting<br />

processes involved appear to be similar across different outcome dimensions.<br />

Consequently, manipulations affecting discounting for one dimension similarly<br />

affect discounting for other dimensions. For sustainability this result is potentially<br />

problematic since many environmental risks involve several or even all of these<br />

dimensions, which may result in severe discounting of the negative consequences.


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 27<br />

In the following section, we will investigate whether discounting mechanisms are<br />

also similar between decision domains.<br />

Generalizability Across Different Decision Domains<br />

Prior research on discounting has focused on several content areas or “decision<br />

domains.” For instance, in studies on temporal discounting, financial choices<br />

(Benzion, Rapoport, & Yagil, 1989; Stevenson, 1986), consumer decisions (Hausman,<br />

1979; Loewenstein, 1988), medical <strong>and</strong> health issues (Cairns & Van der<br />

Pol, 1997; Christensen-Szalanski, 1984), as well as environmental risks (Böhm &<br />

Pfister, 2005; Hendrickx & Nicolaij, 2004) have been used to study how temporal<br />

outcome-delay affects people’s judgments <strong>and</strong> choices. While in most studies one<br />

particular decision domain was addressed, some explicitly compared discounting<br />

in different domains. For instance, Chapman <strong>and</strong> Elstein (1995), Chapman<br />

(1996a), <strong>and</strong> Chapman, Nelson, <strong>and</strong> Hier (1999) compared how people temporally<br />

discounted medical versus financial outcomes in case of single future events.<br />

The studies showed that while individuals apply a similar discount rate for different<br />

decisions <strong>and</strong> judgments within a domain (e.g., future health states), the<br />

discount rates people apply across different domains (e.g., money vs. health) are<br />

essentially unrelated. The existence of domain differences was confirmed in studies<br />

on people’s preferences for future outcome sequences. Chapman (1996b) <strong>and</strong><br />

Guyse, Keller, <strong>and</strong> Eppel (2002) compared people’s preferences for monetary,<br />

health, <strong>and</strong>—in the latter study—environmental outcome sequences. Both studies<br />

revealed clear domain differences. For instance, Guyse et al. (2002) found that<br />

people prefer constant or improving outcome sequences for environmental quality<br />

<strong>and</strong> for health, whereas for monetary outcomes most prefer a decreasing sequence.<br />

Chapman (1996a) shows that the variability of discount rates across decision domains<br />

is not caused by differences in how people evaluate money <strong>and</strong> health;<br />

instead, domain differences appear to constitute a fundamental characteristic of<br />

temporal discounting. Domain differences violate st<strong>and</strong>ard economic discount theory,<br />

which prescribes that individuals should apply the same discount rate to all<br />

types of goods <strong>and</strong> in all decision domains (see, e.g., Frederick et al., 2002).<br />

Domain differences have also been demonstrated with regard to another preference<br />

dimension. Research on how individuals deal with uncertainty—often operationalized<br />

as a person’s “risk attitude” (Weber, Blais, & Betz, 2002)—has revealed<br />

clear domain differences. For instance, Weber et al. (2002) studied people’s risktaking<br />

tendency in six different decision areas (financial investments, gambling,<br />

health <strong>and</strong> safety, recreational, ethical, <strong>and</strong> social decisions); they found that people’s<br />

tendency to either seek or avoid risks is highly domain-dependent. Soane <strong>and</strong><br />

Chmiel (2005) compared risk preferences in three decision domains: work, health,<br />

<strong>and</strong> personal finance. The risk-taking tendency of most respondents (85%) was<br />

domain-specific <strong>and</strong> could not be generalized across domains. Similar to research


28 Gattig <strong>and</strong> Hendrickx<br />

on time discounting (Chapman, 1996a), attempts have been made to ascribe domain<br />

effects in risk attitudes to differences in the way people evaluate outcomes<br />

in different domains, but the results were ambiguous. For instance, the idea that<br />

domain differences would disappear, or at least diminish, by using an alternative<br />

risk attitude measure, in which possible utility function differences are singled out<br />

(the relative risk attitude, see Dyer & Sarin, 1982), was not empirically supported<br />

(Keller, 1985; Krzysztofowicz, 1983).<br />

In sum, it appears that domain differences occur for both preference dimensions<br />

that have been studied extensively, that is, uncertainty <strong>and</strong> temporal delay.<br />

Uncertainty <strong>and</strong> delay affect people’s decisions <strong>and</strong> judgments differently when<br />

the decision at h<strong>and</strong> is about, say, a financial, a health, or an environmental issue.<br />

Although the precise mechanisms underlying such domain differences are<br />

not yet understood, it is clear that conclusions about how discounting affects<br />

judgment <strong>and</strong> choice may not be generalized across different decision domains.<br />

Therefore, to underst<strong>and</strong> how discounting affects the evaluation of environmental<br />

risks, we need to zoom in on discount studies that explicitly address environmental<br />

issues.<br />

<strong>Discounting</strong> of <strong>Environmental</strong> <strong>Risk</strong>s<br />

We will first focus on temporal distance, as this is the only preference dimension<br />

that has been studied frequently in research on environmental risk evaluation.<br />

Many environmental problems have long-term consequences. Some have both<br />

immediate <strong>and</strong> long-term negative effects; for instance, urban air pollution from<br />

traffic may cause immediate odor annoyance as well as long-term health problems<br />

(see, e.g., Gärling & Schuitema, this issue). Other environmental problems, such<br />

as the increase of atmospheric greenhouse gas concentrations or the depletion of<br />

natural resources (e.g., oil, water, minerals), do not have severe immediate effects<br />

but in the long run such risks may have catastrophic consequences. In such cases,<br />

where it may take decades or centuries before the negative effects will occur, temporal<br />

discounting can be expected to strongly affect people’s risk judgments <strong>and</strong><br />

their willingness to change relevant behaviors. Surprisingly, however, the results<br />

from studies on temporal discounting of environmental risks point in a different<br />

direction. Let us briefly review the available studies, which are summarized in<br />

Table 1.<br />

Svenson <strong>and</strong> Karlsson (1989) studied how people evaluate the long-term risks<br />

associated to the storage of radioactive waste. Among other things, subjects were<br />

asked to rate the seriousness of the consequences of a nuclear waste leakage, if<br />

the leakage occurred at different moments in time (between the year 2100 <strong>and</strong><br />

2 million years into the future). While the mean seriousness judgments were<br />

found to decrease with larger delays—which is consistent with st<strong>and</strong>ard discount<br />

models— about 30% of the subjects did not discount at all. Apparently, for these


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 29<br />

Table 1. Summary of Studies on Temporal <strong>Discounting</strong> of <strong>Environmental</strong> <strong>Risk</strong>s<br />

Study <strong>Risk</strong>(s) Studied<br />

Reported Outcome<br />

Delays (Range, Design) Main Finding<br />

Svenson & Karlson Radioactive waste ∼110–2 million years ∼30% nondiscounters<br />

(1989)<br />

storage<br />

within-Ss<br />

Hendrickx et al. Soil pollution 5–90 years<br />

∼40% nondiscounters<br />

(1993)<br />

within-Ss<br />

Nicolaij & Hendrickx Greenhouse effect 5–100 years within-Ss ∼50% nondiscounters,<br />

(2003)<br />

<strong>and</strong> between-Ss no delay effect<br />

Hendrickx & Nicolaij Soil pollution 1 month–25 years No delay effect<br />

(2004)<br />

Böhm & Pfister<br />

(2005)<br />

Water pollution<br />

Coastal degradation<br />

Water pollution<br />

Between-Ss<br />

1 month–10 years<br />

Between-Ss<br />

No delay effect<br />

subjects the seriousness of consequences did not depend on when the leakage would<br />

occur.<br />

Hendrickx, Van den Berg, <strong>and</strong> Vlek (1993) studied how people discount delayed<br />

negative effects of soil pollution. Subjects read 16 descriptions of different<br />

cases of soil pollution, which were systematically varied on two factors: the temporal<br />

delay <strong>and</strong> the likelihood of the negative consequences. The reported outcome<br />

delay varied between 5 <strong>and</strong> 90 years. Subjects were asked to judge the riskiness of<br />

each of these situations. Results were similar to the ones obtained by Svenson <strong>and</strong><br />

Karlsson (1989): on average, risk ratings decreased with longer outcome delays,<br />

but analyses of individual data showed that around 40% of the subjects did not<br />

discount at all.<br />

Nicolaij <strong>and</strong> Hendrickx (2003) gave subjects information about the greenhouse<br />

problem <strong>and</strong> varied the reported temporal delay of the possible negative<br />

consequences of climate change (sea level rise, deterioration of vegetation <strong>and</strong> animals,<br />

human health effects) across three conditions (5, 25, <strong>and</strong> 100 years). Among<br />

other things, subjects were asked if their willingness to alter relevant behaviors<br />

would change if the negative effects would occur sooner (e.g., if the delay was 5<br />

instead of 25 years) or later (e.g., if the delay was 100 instead of 25 years). They<br />

found that for almost 50% of the respondents, willingness to behave in environmentally<br />

friendly ways does not depend on the temporal delay of the negative<br />

consequences of global warming.<br />

Thus, in the three studies in which outcome delay was varied as a withinsubjects<br />

variable, a substantial percentage of people (30–50%) did not discount<br />

delayed environmental outcomes. In Nicolaij <strong>and</strong> Hendrickx (2003), Hendrickx<br />

<strong>and</strong> Nicolaij (2004), <strong>and</strong> Böhm <strong>and</strong> Pfister (2005), outcome delay was varied as a<br />

between-subjects variable: subjects read short descriptions of various environmental<br />

risks (global warming in Nicolaij & Hendrickx, 2003; soil <strong>and</strong> water pollution<br />

in Hendrickx & Nicolaij, 2004; coastal degradation <strong>and</strong> water pollution in Böhm &<br />

Pfister, 2005), in which the reported delay of the possible negative consequences<br />

was systematically varied (delays between 1 month <strong>and</strong> 100 years). In all three


30 Gattig <strong>and</strong> Hendrickx<br />

experiments, the outcome-delay manipulation failed to affect the main dependent<br />

variables (risk judgments, emotions, behavior intentions). Evidently, the absence<br />

of an experimental effect does not allow firm conclusions, but the complete lack<br />

of delay effects in these studies is remarkable.<br />

The substantial fraction of nondiscounters <strong>and</strong> the absence of experimental<br />

delay effects may be typical for the environmental domain. In monetary discount<br />

studies (for an overview, see, e.g., Frederick et al., 2002) individual discount rates<br />

are seldom reported, but the high average annual discount rates usually found in<br />

monetary studies (values up to 345% per year, see second section) suggest that<br />

non-discounting is rare. Studies in the health domain also revealed high average<br />

discount rates (Chapman, 2003, reports discount rates for the health domain up to<br />

421% per year), but nondiscounting has also been observed in this domain. Van<br />

der Pol <strong>and</strong> Cairns (2000) review discount studies in the health domain with a<br />

methodology that allows establishing zero or negative discount rates (assessment<br />

of individual rates, use of open-ended questions, or matching technique). In two<br />

of the reviewed studies (Dolan & Gudex, 1995; Redelmeier & Heller, 1993) high<br />

percentages of nondiscounting were observed (62% <strong>and</strong> 36% of the responses,<br />

respectively). In the other reviewed studies, as well as in Van der Pol <strong>and</strong> Cairns’<br />

(2000) own experiment, the nondiscounting percentages were much lower (or, in<br />

some cases, not reported). So, in the health domain nondiscounting does occur,<br />

but not systematically. Thus, the results from the studies in Table 1 indicate that<br />

temporal nondiscounting is more prominent in the environmental domain than in<br />

other domains.<br />

Much less is known about whether the other three preference dimensions<br />

distinguished above (uncertainty, spatial distance, <strong>and</strong> social distance) also result<br />

in environmental risk discounting or whether the proportion of nondiscounting<br />

respondents is equally high. To our knowledge, no research is available on how<br />

the spatial or social distance of potential negative consequences of environmental<br />

risks affects risk evaluations, although these dimensions seem particularly relevant<br />

for global risks, such as climate change. For instance, if spatial discounting<br />

does occur, then one would expect higher risk judgments from people living<br />

at locations that are particularly vulnerable to the negative effects of climate<br />

change, such as sea level rise or extreme weather events (e.g., hurricanes). International<br />

comparisons in risk evaluations have been conducted (for a review, see, e.g.,<br />

Boholm, 1998), but these studies did neither specifically address environmental<br />

risks nor did they investigate the role of relevant location characteristics, such as<br />

vulnerability.<br />

In traditional formal risk models, uncertainty—defined there as: likelihood<br />

of loss—often constitutes one of the model’s key terms; for gambling risks, likelihood<br />

of loss was shown to be moderately strongly associated with risk judgments<br />

(e.g., Slovic, 1967). Hendrickx et al. (1993) experimentally varied the<br />

reported likelihood of the potential negative consequences of an environmental


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 31<br />

risk (soil pollution) <strong>and</strong> found clear evidence for uncertainty discounting: mean<br />

risk judgments were lower if the reported probability of negative outcomes was<br />

lower. Psychometric <strong>and</strong> more qualitative studies of risk perception (reviewed in,<br />

e.g., Boholm, 1998; Brun, 1994) revealed various factors that appear to influence<br />

people’s risk judgments, several of which (e.g., novelty, ambiguity, disaster potential)<br />

seem related to uncertainty. Unfortunately, these studies do not allow for<br />

clear conclusions about the relative importance of uncertainty compared to other<br />

factors found to affect risk judgments, such as familiarity, voluntariness of exposure,<br />

perceived control, or outcome delay, nor about the possible interactions<br />

among such factors. In the case of environmental risks, where outcomes tend to be<br />

uncertain, delayed, as well as dependent on future actions (i.e., controllable), such<br />

interactions may play an important role. For instance, studies by Gilovich, Kerr,<br />

<strong>and</strong> Medvec (1993) <strong>and</strong> by Highhouse, Mohammed, <strong>and</strong> Hoffman (2002) suggest<br />

that if a risk is (perceived as) controllable, outcome delay may evoke optimism<br />

about the extent to which negative outcomes may be avoided <strong>and</strong>/or positive ones<br />

be accomplished. However, no environmental risks were studied by Gilovich et al.<br />

<strong>and</strong> by Highhouse et al., so additional research on how aspects like uncertainty,<br />

delay, <strong>and</strong> perceived control interact <strong>and</strong>, in combination, affect environmental<br />

risk perception seems worthwhile.<br />

A Possible Explanation for Domain Differences<br />

In our review of discounting mechanisms <strong>and</strong> their role in the evaluation of<br />

environmental risks, we have seen that, on the one h<strong>and</strong>, discounting mechanisms<br />

are stable across different preference dimensions. Regularities in judgment <strong>and</strong><br />

decision processes that have been observed with regard to one dimension, for<br />

example uncertainty, also appear to apply to the other dimensions, such as temporal,<br />

spatial, <strong>and</strong> social distance. On the other h<strong>and</strong>, the evidence discussed in the<br />

previous two sections indicates that temporal discount rates <strong>and</strong> the way people<br />

deal with uncertainty vary significantly across different decision domains. For<br />

instance, temporal nondiscounting seems to occur more often for environmental<br />

risks than for financial <strong>and</strong> health risks. Thus, while discounting mechanisms<br />

appear to be robust across different preference dimensions, discount rates <strong>and</strong><br />

risk-taking tendencies are highly sensitive to a risk’s content domain. How can<br />

this apparent contradiction be understood? A possible explanation arises once we<br />

realize that there is more than one way in which people may comprehend <strong>and</strong><br />

evaluate risks. Recently, several “dual process” theories of risk evaluation have<br />

been proposed (e.g., Böhm & Pfister, 2000; Loewenstein, Weber, Hsee, & Welch,<br />

2001; Slovic, Finucane, Peters, & MacGregor, 2004), which we will discuss briefly.<br />

Loewenstein et al. (2001) distinguish two fundamentally different psychological<br />

mechanisms on which risk judgments, risky decisions, <strong>and</strong> behaviors are<br />

based: one is a cognitive, ”consequentialist” evaluation strategy, which means that


32 Gattig <strong>and</strong> Hendrickx<br />

risk judgments <strong>and</strong> risky decisions are based on subjective assessments of the<br />

severity <strong>and</strong> likelihood of possible outcomes. The alternative, ”emotion-driven”<br />

strategy entails that people’s reactions toward a risk are directly based on affective<br />

responses to the risk, which include emotions like fear, worry, or anxiety. Since<br />

emotional reactions toward a risk have other determinants than cognitive assessments<br />

of risk, the two strategies can diverge; if that happens, the emotion-based<br />

reactions will dominate people’s risk judgments, risky decisions, <strong>and</strong> behaviors.<br />

Whether the affective reactions toward a risk will diverge from, <strong>and</strong> thus suppress,<br />

the cognitive risk assessment depends on various situational factors, such as the<br />

mental vividness of the potential outcomes <strong>and</strong>/or the temporal outcome delay (for<br />

a detailed discussion, see Loewenstein et al., 2001). If such situational factors vary<br />

systematically across different decision domains, then the prominence of the two<br />

evaluation strategies will also differ per domain. For instance, if a typical health<br />

or environmental risk evokes stronger emotions than a financial risk, for instance<br />

because the possible negative outcomes are more vivid to people, then cognitive,<br />

consequentialist evaluations will be less important in the former domains than in<br />

the latter one, which could explain some of the observed domain differences in<br />

discounting.<br />

Slovic, Finucane, Peters, <strong>and</strong> MacGregor (2002, 2004) distinguish two similar<br />

risk evaluation processes. In their terminology, people may assess risks both<br />

“analytically” <strong>and</strong> “experientially.” In the first case, risk judgments are based on<br />

formal, normative rules <strong>and</strong> algorithms (e.g., probability calculus), which requires<br />

conscious, effortful, analytic mental activities. In the experiential system, on the<br />

other h<strong>and</strong>, risk judgments are based on affect, emotions, <strong>and</strong> associative memories,<br />

which are the result of fast, intuitive, <strong>and</strong> often largely unconscious mental<br />

processes. Whereas Loewenstein et al. (2001) mainly focus on cases where the<br />

two risk evaluation strategies diverge, Slovic et al. (2004) emphasize the complementary<br />

role <strong>and</strong> the continuous interaction between the two modes of thought.<br />

They argue that, for instance, affective responses may serve as cues to assess<br />

key analytical elements such as loss probabilities. Slovic <strong>and</strong> colleagues highlight<br />

the mutual dependency of the evaluation strategies, but they also provide some<br />

evidence that the prominence of affect-based judgments depends on situational<br />

factors, for instance on whether or not the risk judgments are made under time<br />

pressure (Finucane, Alhakami, Slovic, & Johnson, 2000).<br />

A third, somewhat different dual-process theory of risk evaluation was proposed<br />

by Böhm <strong>and</strong> Pfister (2000, 2005). According to these authors, people’s<br />

risk evaluations are based on two components: loss-related (or “consequentialist”)<br />

<strong>and</strong> ethical concerns. Loss-related concerns refer to the possible negative consequences<br />

of the risk at h<strong>and</strong> <strong>and</strong> comprise classical risk components such as the<br />

probability <strong>and</strong> the seriousness of possible losses. Ethical concerns, on the other<br />

h<strong>and</strong>, refer to the events or actions that caused the risk; if these actions or events<br />

violate ethical principles or norms, the risk is considered as more serious. The


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 33<br />

two evaluation strategies distinguished by Böhm <strong>and</strong> Pfister differ from the ones<br />

in Loewenstein et al. (2001) <strong>and</strong> Slovic et al. (2004). While the latter authors<br />

essentially differentiate between analytical <strong>and</strong> emotion-based risk judgment, the<br />

evaluation strategies distinguished by Böhm <strong>and</strong> Pfister do not differ in the importance<br />

of emotions, but in the nature of the emotions on which the risk judgment<br />

is based: loss-related concerns may elicit emotions like fear or sadness, whereas<br />

ethical concerns may give rise to emotions like anger or guilt (Böhm, 2003; Böhm<br />

& Pfister, 2000, 2005).<br />

Hendrickx <strong>and</strong> Nicolaij (2004) proposed an explanation for the relative prominence<br />

of temporal nondiscounting in the evaluation of environmental risk (see<br />

above), that was based on the Böhm & Pfister model. They argue that outcomedelay<br />

is only relevant for loss-related concerns <strong>and</strong> not for ethical concerns, <strong>and</strong><br />

that, consequently, discount rates will depend on the relative importance of lossrelated<br />

versus ethical concerns in the risk evaluation process. As shown by Böhm<br />

<strong>and</strong> Pfister (2000, 2005) <strong>and</strong> by Hendrickx <strong>and</strong> Nicolaij (2004), the relative importance<br />

of loss-related <strong>and</strong> ethical concerns depends—probably among other<br />

factors—on the causal structure of a risk. Ethical concerns are more important<br />

when the risk has a human instead of a natural cause <strong>and</strong>, if the cause is human,<br />

when the people causing the risk <strong>and</strong> the potential victims are different (groups<br />

of) people. Hendrickx <strong>and</strong> Nicolaij argue <strong>and</strong> provide evidence (see below) that<br />

the causal structure of environmental risks differs from that of financial <strong>and</strong> health<br />

risks. For instance, environmental risks are often caused by cumulative processes,<br />

that is, they result from the actions of many people, whose individual contributions<br />

are small. The potential negative consequences of such risks also affect many<br />

people, but the people who cause the risk are not necessarily the ones who will<br />

bear the (most severe) negative consequences. For instance, global warming is<br />

mainly caused by economically well-developed countries as they contribute most<br />

strongly to the greenhouse gas emissions, whereas the negative consequences of<br />

global warming will probably be most severe in poor countries that lack the means<br />

to take adequate protective measures. Most financial <strong>and</strong> health risks, on the other<br />

h<strong>and</strong>, are personal risks, in which the person causing or taking the risk will also be<br />

the main victim if things go wrong. Such differences in causal structure may evoke<br />

differences in the importance of ethical concerns <strong>and</strong>, thus, in the prominence of<br />

discounting.<br />

To test these ideas, Hendrickx <strong>and</strong> Nicolaij (2004) asked subjects to rate<br />

various real-world risks, environmental ones, <strong>and</strong> others, on several relevant characteristics.<br />

Subjects also read short descriptions of realistic risks, in which both<br />

the causal structure <strong>and</strong> the reported outcome delay were systematically varied.<br />

Effects of these manipulations on, among other factors, risk judgments <strong>and</strong> the<br />

prominence of ethical concerns were measured. The results confirm that environmental<br />

risks differ in several regards from other risks. For instance, subjects rated<br />

the consequences of environmental risk as more delayed than those of other risks.


34 Gattig <strong>and</strong> Hendrickx<br />

Subjects also considered situations in which the potential victims of a risk are not<br />

the people who caused the risk as more typical for environmental than for other<br />

risks. And, thirdly, ethical concerns were more prominent for environmental risks<br />

than for other types of risk. Thus, the notion that environmental risks differ from,<br />

for example, health <strong>and</strong> financial risks was confirmed, but whether these differences<br />

can explain the prominence of nondiscounting could not be established in<br />

this study.<br />

Summary<br />

Summary, Research Suggestions, <strong>and</strong> Policy Implications<br />

In this article, we reviewed empirical results from behavioral decision research<br />

in areas relevant to environmental risk perception <strong>and</strong> decision making. We<br />

highlighted the similarities in the processes underlying uncertainty discounting,<br />

temporal discounting, spatial discounting, <strong>and</strong> social discounting. We then drew<br />

attention to the fact that discounting seems fairly sensitive to a risk’s content domain<br />

(e.g., financial vs. health vs. environmental risks). For instance, with regard<br />

to temporal discounting, environmental risks appear to differ from other types of<br />

risk in that a substantial fraction of people (30–50%) does not discount at all. Dualprocess<br />

risk theories may offer insight in the causes of such domain differences. A<br />

common finding in research on dual-process theories is that the way people react<br />

to a risk depends on specific risk characteristics, such as the causal structure of the<br />

risk or the vividness of the possible consequences. If risks from various decisions<br />

domains differ with respect to such factors, then the prominence of different risk<br />

evaluation strategies may vary systematically across different domains. In other<br />

words, domain differences in the way people deal with a risk may simply reflect<br />

(average) differences on the factors that determine the prominence of different risk<br />

evaluation strategies.<br />

Future Research<br />

Identification of different risk evaluation strategies <strong>and</strong>, especially, of the<br />

factors that encourage or discourage the use of specific risk evaluation strategies<br />

should have high priority on the risk research agenda. In addition, we should establish<br />

if (<strong>and</strong> how) risks from various domains differ on such factors. Hence, we need<br />

to study how—in the eyes of the people whose reactions <strong>and</strong> behaviors we want<br />

to underst<strong>and</strong>, predict, or change—specific risks score on the key determinants of<br />

risk evaluation strategies. In part, that information may be derived from studies<br />

in the psychometric research tradition, where subjects were asked to rate numerous<br />

risks on various risk characteristics. Unfortunately, the factors that affect the<br />

prominence of different risk evaluation strategies (e.g., causal structure, outcome


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 35<br />

vividness, outcome delay, time pressure; see previous section) did receive little<br />

attention in these studies, so additional research on how people perceive specific<br />

risks in terms of the key determinants of risk evaluation strategies is necessary. Obviously,<br />

different risks within a particular domain may also differ on such factors<br />

<strong>and</strong> thus evoke different evaluation strategies. For instance, environmental risks<br />

with a natural cause (e.g., air pollution due to volcanic activity) may be evaluated<br />

differently than a similar risk with a human cause (e.g., air pollution from motorized<br />

traffic). For other examples, see Brown, Peterson, Brodersen, Ford, <strong>and</strong> Bell<br />

(2005). Thus, categorization of risks in terms of the fundamental determinants of<br />

how people evaluate a risk, such as its causal structure, may help us underst<strong>and</strong><br />

both differences between decision domains, as well as differences between risks<br />

within one domain.<br />

In addition, future research should investigate decision making when more<br />

than one dimension is involved. Scarce examples of such research are Stevenson<br />

(1992), Keren <strong>and</strong> Roelofsma (1995), Ahlbrecht <strong>and</strong> Weber (1997), <strong>and</strong> Weber<br />

<strong>and</strong> Chapman (2005). This research suggests that combined discounting (i.e., discounting<br />

when several preference dimensions are involved) is less strong than<br />

what one would expect from simply aggregating the respective discounts alone.<br />

For example, if a reward of $100 with a probability of .95 is worth $95 for sure to<br />

the decision maker <strong>and</strong> if the same reward delayed by 4 weeks is also worth $95<br />

now, then a reward with a probability of .95 in 4 weeks will be judged as being<br />

worth more than multiplying the discount rates for each dimension would suggest. 4<br />

Hence, adding temporal delay to an already uncertain reward is less “harmful” than<br />

adding the same delay to a certain reward. However, research on adding preference<br />

dimensions other than uncertainty <strong>and</strong> temporal delay is completely lacking.<br />

Thus, it remains unclear whether the phenomenon that combined discounting<br />

tends to be less strong than one would expect on the basis of normative decision<br />

theory, is restricted to combinations of temporal <strong>and</strong> uncertainty, or whether<br />

this effect will also occur if other dimensions are added. The latter result would<br />

corroborate the reasoning above, but further studies addressing this question are<br />

necessary.<br />

Together with the results reported in this article, such insights would contribute<br />

to our underst<strong>and</strong>ing of the way in which people perceive, evaluate, <strong>and</strong> h<strong>and</strong>le<br />

environmental risks <strong>and</strong>, as will be discussed below, thereby enhance the chances<br />

for achieving environmental sustainability.<br />

Policy Implications<br />

Promoting sustainability often requires behavioral changes. Such changes can<br />

either be achieved voluntarily, for example through appeals, or by coercion. Our<br />

4 According to normative decision theory, the two discount rates should be multiplied.


36 Gattig <strong>and</strong> Hendrickx<br />

study’s main policy implication is that environmental decision making appears to<br />

be more long-term oriented than decisions in other domains. Contrary to decision<br />

making in other domains, when environmental risks are at stake a substantial<br />

fraction of people seems to take future considerations fully into account. Thus, appealing<br />

to the public’s long-term preferences may be more efficient in the case of<br />

environmental risks than for, for example, financial risks. This long-term orientation<br />

potentially could be enhanced by the use of appropriate problem descriptions,<br />

for instance, by presenting future outcomes as potential losses against the status<br />

quo (see also Midden, Kaiser, & McCalley, this issue). The research discussed also<br />

suggests that people weigh uncertain, delayed, or distant outcomes more heavily<br />

(i.e., discount less) if they are caused by humans <strong>and</strong> if the negative consequences<br />

are not borne by (or limited to) the people who caused the risk. Hence, by emphasizing<br />

human responsibilities in the causation of the risk, or by highlighting<br />

discrepancies between cause <strong>and</strong> victims, one may increase the prominence of<br />

ethical concerns (or in the terminology of Lindenberg & Steg, this issue: of the<br />

normative goal-frame) in people’s risk evaluations. This in turn may result in<br />

behaviors or decisions that are (more) in line with environmental sustainability.<br />

Designers of behavior modification <strong>and</strong>/or risk communication programs could<br />

(<strong>and</strong> should) make use of these insights.<br />

Another implication of the findings reported above is that policies based on<br />

st<strong>and</strong>ard economic theories may not match the preferences of a significant proportion<br />

of the population. In the past decades, an increasing number of economists<br />

engaged in environmental <strong>and</strong> resource economics, thereby providing highly valuable<br />

insights with respect to sustainability. However, st<strong>and</strong>ard economic theories<br />

still postulate that future outcomes should be discounted at a rate that is constant<br />

over time—or at least across the entire period the outcome is to be delayed—<strong>and</strong><br />

that lies in the range of the current market interest rate (see Loewenstein & Thaler,<br />

1989). As a consequence, future events that are delayed for several decades or<br />

more will lose almost all significance. Given the very long time span, for instance,<br />

in the case of nuclear waste, throughout which environmental risks prevail, this<br />

procedure may result in an almost complete neglect of the needs of future generations.<br />

This is in conflict with environmental sustainability as well as with the<br />

preferences of a large part of the public.<br />

In addition, for a substantial part of the population st<strong>and</strong>ard economic thinking<br />

may lead to counterintuitive recommendations with regard to policy decisions<br />

about how to deal with scarce natural resources. For instance, it is in accordance<br />

with st<strong>and</strong>ard economic thinking to completely exhaust a natural resource if the<br />

gains obtained from it can be invested at a return rate that is higher than the<br />

respective discount rate, that is, the market interest rate. Given the prominence of<br />

nondiscounting observed in environmental risk discounting, policies solely based<br />

on economic theories thus may arrive at solutions that are incompatible with the<br />

preferences of a considerable fraction of the population.


<strong>Discounting</strong> <strong>and</strong> <strong>Environmental</strong> <strong>Risk</strong> <strong>Perception</strong> 37<br />

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ALEXANDER GATTIG studied sociology <strong>and</strong> economics at the University of<br />

Bremen, Germany, specializing in applied game theory <strong>and</strong> event history analysis.<br />

He obtained his PhD at the University of Groningen, the Netherl<strong>and</strong>s. His dissertation<br />

thesis centered on intertemporal choices, especially the cognitive mechanisms<br />

underlying discounting processes in choice under risk <strong>and</strong> intertemporal choice.<br />

Currently, he works as a postdoc at the University of Bremen, Germany. His project<br />

focuses on international comparisons of trends in voting behavior <strong>and</strong> social mobility.<br />

In the past he spent some time at Nuffield College, Oxford, <strong>and</strong> Stanford,<br />

USA. His research interests include behavioral decision theory <strong>and</strong> categorical<br />

data analysis.<br />

LAURIE HENDRICKX obtained his PhD at the University of Groningen, based<br />

on research about the cognitive processes underlying people’s risk judgments <strong>and</strong><br />

risky decisions. Currently, he is assistant professor at the Center for Energy <strong>and</strong> <strong>Environmental</strong><br />

Studies (IVEM) at the University of Groningen. His research interests<br />

focus on the psychological mechanisms underlying environmental risk perception<br />

<strong>and</strong> environmentally relevant behaviors. He has conducted <strong>and</strong>/or supervised several<br />

research projects about the role of temporal factors in risk evaluation <strong>and</strong><br />

social dilemmas. More applied research projects were aimed at underst<strong>and</strong>ing,<br />

predicting, <strong>and</strong>/or changing environmentally relevant behaviors, in domains such<br />

as mobility <strong>and</strong> household energy use.

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