Going Green with Envy

Young man filling up his electric car

Daniel Read, Professor of Behavioural Economics, Warwick Business School

 

The green licence plate nudge has been proposed in England as a way to increase uptake of electric vehicles, and thereby to reduce the nation’s carbon footprint. It is easy to see why governments are likely to grasp the electric car solution with both hands — it appears to enable things to run more or less as usual without any disruption to lifestyle.

I will set aside whether electric cars themselves should be seen as a solution to that problem.

The green licence plate can affect consumption in several ways. One way is to signal societal approval of electric cars. It is like the praise of a parent or teacher, putting a gold star in your exercise book for good work. If consumers want those gold stars, they might buy electric cars to get them.  The green license plate also tells drivers how many electric vehicles are on the road, and the power of social proof might push increasingly more people to make the shift to electric, producing a positive feedback loop.  Perhaps even more crucially, knowing the streets have electric cars on them can make all drivers realise that electric cars actually work, if there is still uncertainty about that.

The licence plate proposal has however received a lot of interest because, in classic nudge-theory style, it deploys a well-known bias to achieve a good goal. That bias is envy and status seeking.  As Thorstein Veblen observed, “In order to gain and to hold the esteem of men it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence” .  Electric cars are expensive, high ticket items largely accessible only to the well off. They are also likely to be a family’s second car, since even now few will rely on electric cars for long journeys. They are therefore not easily accessible to the working poor, nor even to the lower middle classes. This is a nudge, therefore, that adds to the privileges of the well-off, and allows them to display their peacock’s tail even more prominently than before.

BMW i8
Harnessing the Veblen Effect

Moreover,  the urge to overconsume to keep up with your slightly more prosperous neighbours, and to outconsume your equally prosperous ones, is itself a social problem we might want to nudge away — indeed this urge could have a greater impact on our carbon footprint than all our current driving decisions.

The potential problems with the green licence plate go beyond the problem of what Veblen called invidious comparison. The licence plate is a relatively minor innovation, and (in my view) by itself unlikely to have much effect on the purchase of electric cars. Electric cars are already prominently labelled, and car manufacturers can be relied on to use a great deal of branding and product differentiation to make their electric cars distinct if that is what consumers want. It is important to emphasise this. The green licence plate is proposed, in part, because it will set electric vehicles apart from other cars, and it is assumed that this is what consumers want. Yet if consumers do want electric cars to be prominently differentiated and are more likely to buy them when they are so differentiated, then manufacturers will readily adopt that differentiation. This situation is very different from the classic nudge situation in which marketers will not spontaneously offer the interventions, because consumers will not demand them.

Perhaps the degree of envy provoked by the green license plate is minor and a cost worth paying for a marginal increase in the take up of electric cars.   But the license plate is being proposed alongside some serious additional perks. It is to be treated like the blue badge (used in the UK to give privileges to disabled drivers) allowing electric cars to use bus lanes and to receive free parking. It is not hard to see the downsides of this.  If many drivers of electric cars use the bus lanes, bus lanes will become congested and bus travel less attractive. Buses will become emptier, and public transport even less viable than it already is (except, perhaps, in London). The roads will be less congested because some electric cars are now in the bus lane.  This will make driving even conventional cars more attractive. Offering free parking to drivers of electric cars will make them want to drive more, and to take journeys by car they might previously have taken using more sustainable means. Overall, we can expect more cars on the road.  Some of them will be electric, some of them not. It will be politically difficult to remove any perks that are offered electric car drivers, and so the increased congestion will be around for a long time.

I suggest that if we are to “nudge for good” we first need to consider deeply whether deploying socially divisive motives such as invidious comparison do more good than harm, especially if no effort is made to ensure less privileged members of society are able to achieve the required status — imagine being reviled because you are driving an old diesel car that is the only vehicle you can afford.  We also need to consider the undesirable consequences of the nudges being proposed. And as behavioural scientists we need to be sure the policy we are supporting is indeed a good one