The hidden zero effect in pro-environmental behavior

Most environmental decisions involve intertemporal tradeoffs, in that they require foregoing immediate gratification for the sake of future environmental quality. One such example is investing in improving energy efficiency, which entails an initial upfront cost in exchange for a future stream of reduced energy use and economic savings. The majority of individuals fail to invest in energy efficiency even when the long-run economic benefits outweigh the up-front additional costs. The literature on intertemporal choice has highlighted that individuals show two apparently contrasting preferences: a preference for immediate gratification at the expense of the future and a preference for improving future outcomes. Previous research demonstrated that the prevalence of either one is influenced by the framing of a choice situation. Particularly they showed that framing the same situation in a way that made the past and future consequences of each outcome explicit increased individuals preferences for improving outcomes over immediate gratification. This paper present a survey experiment which applies this finding to the context of the purchase of an energy saving appliance. Individuals will be presented with a logically equivalent purchase decision, framed as either a choice between two temporally situated outcomes or as a choice between two sequences of outcomes. More specifically, through a stated choice survey experiment two lesser known framing effects to the hypothetical purchase decision of an energy saving appliance: the hidden- zero effect and the delay/speed-up asymmetry. The hidden-zero effect shows that expressing explicitly that the in the future individual will be getting nothing or even losing from choosing immediate gratification can limit impatience. While the delay/speed-up asymmetry proposes that individuals are more impatient when a smaller immediate gratification option is delayed, as opposed to when a larger later option is anticipated. These framing effects have never been tested within an environmental choice context, nor tested in combination. Will the amount of individuals who purchase an energy efficient appliance increase if the associated future CO2 and monetary savings are made more salient? Will individuals discount less future savings if the they can partly anticipate them? This paper hypothesizes that the two framing effects in combination can lead to the highest percentage of people choosing the energy saving appliance. The objective is to highlight ways in which framing techniques of intertemporal outcomes can lead to higher adoption of not only energy saving behavior but pro-environmental behaviors in general.