The AIQ Podcast: The psychology of climate change

[Audio extract: 1958 Bell Science Hour documentary]

Richard Carlson

What would happen if we could change the course of the Gulf Stream or the other great ocean currents? Or warm up Hudson Bay with atomic furnaces?

Dr. Frank Baxter

Extremely dangerous questions. Because with our present knowledge we have no idea what would happen. Even now, man may be unwittingly changing the world’s climate through the waste products of his civilisation. Due to our release through factories and automobiles every year of more than six billion tonnes of carbon dioxide, which helps air absorb heat from the sun, our atmosphere seems to be getting warmer.

Richard Carlson

This is bad?

Dr. Frank Baxter

Well, it’s been calculated that a few degrees rise in the Earth’s temperature would melt the polar ice caps. And if this happens, an inland sea would fill a good portion of the Mississippi Valley. Tourists in glass-bottomed boats would be viewing the drowned towers of Miami through 150 feet of tropical water.

Narrator

The clip you just heard comes from the documentary series The Bell Science Hour, produced by the filmmaker Frank Capra. Incredibly, this warning about the consequences of human-driven climate change aired on US primetime television in 1958, when the Space Race dominated the headlines and Elvis Presley was riding high in the pop charts. It shows that climate science has been understood – and communicated to the public – for over half a century.

So why has it taken so long for us to act? Political dithering and propaganda from fossil-fuel companies have played a role. But human psychology is a big part of the story. Fear and apathy have prevented us from facing up to difficult truths about climate change and brought us to the brink of crisis.

In this episode of the AIQ podcast, we’ll be looking at the connections between climate and the human mind. We’ll learn what evolution can teach us about why climate change fails to engage us on an emotional level. But we’ll also discover grounds for hope.

Narrator

The icy Swiss town of Davos, January 2020. Politicians, business leaders and pressure groups have gathered for the World Economic Forum. And one subject dominates the agenda: climate change.

In his opening address, President Donald Trump said the US was taking the lead in tackling environmental damage – and aimed a veiled dig at teenage climate activist Greta Thunberg.

Donald Trump

We’re committed to conserving the majesty of God’s creation and the natural beauty of our world.

This is not a time for pessimism; this is a time for optimism.  Fear and doubt is not a good thought process because this is a time for tremendous hope and joy and optimism and action. But to embrace the possibilities of tomorrow, we must reject the perennial prophets of doom and their predictions of the apocalypse. We will never let radical socialists destroy our economy, wreck our country, or eradicate our liberty. 

Narrator

Using her own panel at Davos, Thunberg struck back at the American president.

Greta Thunberg

We couldn’t care less about your party politics. From a sustainability perspective, the right, the left as well as the centre have all failed. No political ideology or economic structure has been able to tackle the climate and environmental emergency and create a cohesive and sustainable world. Because that world, in case you haven’t noticed, is currently on fire. You say children shouldn’t worry. You say: “Just leave this to us. We will fix this, we promise we won’t let you down. Don’t be so pessimistic.” And then, nothing. Silence. Or something worse than silence. Empty words and promises which give the impression that sufficient action is being taken.

Narrator

Hope, optimism, pessimism, panic, doubt. The exchange of words between Trump and Thunberg shows that attitudes to climate change are often bound up with emotional responses.

But while many may be angry or fearful about the climate threat, others find the problem too abstract and overwhelming to think about, especially in countries that have yet to suffer the worst effects of extreme weather. To find out why, we have to look at evolutionary psychology.

Think about what life was like out on the savannah, two million years ago. Our hunter-gatherer ancestors were surrounded by mortal threats, from rival tribes to sabre-tooth cats. In this environment, we were primed to avoid dangers we could see, hear and touch.

These primeval impulses continue to govern human behaviour in the modern world. Harvard psychologist Daniel Gilbert coined the acronym P.A.I.N, ‘pain’, to describe the kinds of stimuli that trigger our ancient synaptic pathways and rouse us into action. These catalysts tend to be Personal (affecting us or our loved ones directly); Abrupt (relating to sudden changes in our environment); Immoral (things we deem unethical); and present right Now (as opposed to occurring in the future). For many people, climate change fails to press these psychological buttons.

Adding to the problem, many of the proposed solutions to the climate crisis get in the way of our evolutionary instincts, which lead us to focus on our short-term health and happiness. Behavioural economists have shown how these instincts override the rational part of our brains, resulting in bad decisions.

Where traditional economists supposed that human beings were like Mr Spock from Star Trek – cold and logical – behavioural experts argue we are more like another famous fictional character.

[Audio extract from The Simpsons]

Narrator

Like Homer Simpson, most people are subject to various irrational impulses: anger, envy, fear, impatience. And these emotions lead us to reject the immediate costs and reductions in living standards that would be needed to curb carbon emissions, even if we know they could help avert the climate crisis over the long term.

Here’s Marte Borhaug, global head of ESG investment solutions at Aviva Investors, to explain more.

Marte Borhaug

What the theory tells us is that human beings are a bit irrational; we tend not to respond very well to long-term risks. That’s why you might spend a lot of money and forget that you have to pay it back later.

We’re unlikely to think about the longer term. One positive is that people have begun to realise the near-term risks of climate change. You’ve seen the Amazon burning, we’ve seen Venice getting flooded, we’ve seen fires across Australia, we’ve actually started seeing the physical impact of climate risk. Every time we speak to people about the impact of climate it’s to say, “it’s no longer a theory in the future – it’s harming insurance companies today, we can see and feel the change.” Because it’s becoming more present, people are recognising the dangers, but there is still an inherent psychological barrier.

Narrator

Thankfully, governments, businesses and non-profit organisations have a range of tools at their disposal to tackle our ingrained habits. And psychological insights can help determine which policies are most likely to be effective.

Start with the carbon tax, a charge on CO2 emissions to incentivise greener behaviours. These taxes are a common tactic among climate-conscious governments, but they can be unpopular.

Introduced in 2014, France’s carbon tax was sharply hiked in 2018 to bring it in line with rising fuel prices. This sparked the Yellow Vests movement, a series of mass protests that brought parts of the country to a standstill and prompted a government climbdown.

Other carbon taxes have been more successful. In 2008, the Canadian province of British Columbia introduced a tax on emissions that applied to both companies and households, with the amount rising in increments from ten Canadian dollars to C$30 by 2012. The policy won wide support and helped the province cut emissions by around as much as 15 per cent over the period.

Psychology tells us why the Canadian tax might have been more effective than the French example. The British Columbia tax came bundled with economic sweeteners, such as a cut in income taxes, that appealed to the human preference for short-term rewards. No such incentives were offered in France. The French policy was also seen as regressive, because many companies were exempt. It was a case of all stick, no carrot.

But what if we could also create policies that could shift people’s behaviours at a micro level? In recent years, an approach has been devised that seeks to be more sensitive to people’s psychological tendencies in order to ‘nudge’ them to make better decisions.

Working with the Nobel Prize winning economist Richard Thaler, Harvard Professor Cass Sunstein co-authored Nudge, a bestselling book on the subject. As Sunstein explained when the book was published in 2008, nudging is designed to make us act more rationally – more like Spock than Homer Simpson.

Cass Sunstein

With years of discussion, what Thaler and I have been thinking about is how to strengthen the Mr Spock in us as against the Homer in us. Homer is a behavioural type, in that he has self-control problems, he is overly optimistic about things, he uses mental shortcuts that get him into a whole lot of trouble […] and we think this is the sort of person who needs a nudge.

Human beings should be free to choose, and that’s central to our project, but we also think it’s useful to steer people in directions that make their lives go better.

Narrator

Nudging works on the basis that as people are lazy and impatient, they are more likely to do the right thing if organisations make it easy for them. For example, under auto-enrolment, individuals are signed up to pension schemes automatically, with the freedom to opt-out if they wish. But most people stick with the default option. In the US, auto-enrolment has boosted annual savings rates by $7.4 billion.

So how does this apply to climate change? Using the same principle as auto-enrolment, “green defaults” have been shown to bring about climate-friendly outcomes. For example, Rutgers University modified the default setting on its printers from “print on a single page” to “print on front and back” in an effort to save paper. The results were dramatic. Within three years of the start of the initiative in 2010, the university estimated it had saved 55 million sheets, a reduction of more than 40 per cent, and equivalent to 4,000 trees.

On a larger scale, green defaults have been shown to increase the take-up of green energy by households. Here’s Sunstein speaking at the London School of Economics.

Cass Sunstein

There's interest in some nations in using default rules, so people are automatically enrolled in climate-friendly (let's say) energy provision, but if it's more expensive they can opt out. The evidence from Germany is that the impact of automatic enrolment and clean energy is massive, so under an opt-in design, about 6.7 percent of people say OK, and under an opt-out design about 67 percent of people stay in and they know they're staying in […] So there’s a range of things that can be very impactful.

Narrator

But while nudging may be part of the solution, it is not the whole answer. Nudges have been criticised as paternalistic. And they sometimes provoke a backlash. One US-based attempt at green nudging led to increased energy consumption among conservatives, who were irritated at what they saw as a high-minded environmentalist conspiracy to control their behaviour.

To bring about sustained change at the kind of scale needed to address the climate crisis, experts agree more people have to be persuaded of the need to act, as well as incentivised and nudged to adopt climate-friendly lifestyles.

This will require effective communication that takes psychological preferences into account. Climate communicators need to win hearts and minds.

[Audio extract from the trailer to An Inconvenient Truth]

Al Gore

Is it possible we should prepare against other events besides terrorists?

Trailer Narration

From Paramount classics comes a film that has shocked audiences everywhere they’ve seen it…

Al Gore

The Arctic is experiencing faster melting. If this were to go, sea levels worldwide would go up 20 feet. This is what would happen in Florida.  Around Shanghai, home to 40 million people. The area around Calcutta, 60 million. Here’s Manhattan. The World Trade Center Memorial would be underwater. Think of the impact of a couple hundred thousand refugees, then think about the impact of a couple hundred million.

Narrator

That was a clip from the trailer for Al Gore’s 2006 documentary An Inconvenient Truth. The film helped raise awareness of climate change, but there’s evidence that focusing on the threat of catastrophe can be counterproductive. Psychological studies show that people tend to react better to a positive narrative, while stories full of doom-and-gloom can lead people to switch off. After all, nobody likes bad news.

Marte Borhaug says it can be more effective to combine messages about the dangers of climate change with tips for practical steps that we can all take to improve the situation. She follows this principle when engaging with companies to encourage them to be more sustainable and manage their climate risks.

Marte Borhaug

I think people generally react best to a positive narrative. Sometimes the debate might have tended to be too much on the negative. “We don’t want to own this, this is everything we’re going to divest from, these are the bad guys.”

The danger is that you create an “in and out” group, you say, “here is the bad stuff, and if you’re over there, you can’t be part of the solution, and here’s the in group that’s everything we’re going to celebrate.” The problem with that is it divides the world into good and evil – and nobody likes being put in that category. Company leaderships will continue how they’ve always done it. Wouldn’t it be more powerful to try and get everybody in the in group, and say the whole economy needs to shift and everybody has the opportunity to take the carrot? That’s why we believe in engagement – the carrot – and then divestment as the stick, but the point of engaging first is it’s worthwhile being the one who asks the questions and drives change.

Narrator

In Norway, there’s an example of a successful environmental campaign that might contain lessons for the wider world. The Scandinavian country has become the world leader in electric vehicle usage: Norway is now the number one in EV ownership per capita and electric cars account for just under 50 per cent of all vehicles on Norwegian roads – a far higher proportion than in any other country.

To achieve this, the government designed policies that would press citizens’ psychological buttons and influence their behaviour. It started by offering incentives such as tax breaks on EV purchases, along with other sweeteners like free parking and permission to drive in the bus lane during rush hour. In addition, companies and local governments were incentivised to build charging infrastructure. Much of this charging network runs on clean hydro power and incorporates behavioural nudges into its design. Here’s Borhaug to explain more.

Marte Borhaug

I was driving to our cabin – Norway is a big country with lots of remote villages, lots of nature – and we drove into a gas station to fill up. You drive first past all the electric vehicle chargers and it’s only at the end of it you find the gasoline. The default is now electric. Every single car park you go to, the first two floors are all EV bays. It makes it more inconvenient to own a diesel or gas car. So those things help make a shift.

Narrator

As well as nudging and incentives, the government created a messaging campaign based on the story of Norway’s push to overcome its historic reliance on fossil fuels and become a leader in green living. It is an inclusive and inspiring narrative, and everyone is invited to buy into it.

[Audio extract from Norwegian government video promoting EVs]

"We are paving the way and showing the world how we can keep it like this. Green. Clean. For generations to come."

Narrator

This government video talks about paving the way for EVs for generations to come – it’s the kind of positive message that encourages action.

On a bigger scale, Norway’s success on EVs indicates the power of social norms in propelling change. Part of the reason action on the climate crisis has been so slow is that individuals tend to require proof others are doing something before they follow suit. But once people begin to think and act differently, the power of social conformity can begin to operate in the other direction, thanks to a process known as a social “cascade”. This amplifies the effect of individual consumer choices and creates momentum. 

There is proof this can make a difference in tackling serious global threats. Like climate change, the “hole in the ozone layer” was once seen as a near-impossible challenge to overcome. But public opinion shifted extremely quickly once the danger became clear in the mid-1980s. Policymakers successfully secured a binding international agreement, the Montreal Protocol (1987), to phase out ozone-damaging chemicals.

[Audio extract from UN video on the Montreal Protocol]

David Attenborough

In our long history, there is one unprecedented act of humanity in which every country on earth came together to protect the future of life on Earth. The Montreal Protocol.

If the destruction wasn’t stopped, we’d be at risk from lethal levels of UV radiation.

…Faced with this global threat, the world came together to take action. In 1987 more than 30 countries agreed to phase out the production of CFCs and signed the Montreal Protocol.

Narrator

The campaign that culminated in the Montreal Protocol involved shrewd policy design, which ensured the economic costs were fairly distributed, and a clever messaging campaign to raise awareness without unduly scaring people. As more people did the right thing, others were compelled to follow their lead.

A similar process could accelerate action on climate change. As more people become convinced of the need for action, they will influence others in turn and potentially set off a green cascade across whole societies. As any behavioural scientist will tell you: where there’s a will, there’s a way.

Thank you for listening to the AIQ podcast. You can read the latest issue of AIQ magazine, a climate change special, online at Avivainvestors.com. Please stay tuned for future episodes.