Costly Shortcuts: The Mental Traps in Climate Policy

Climate change is one of the biggest collective action problems the world has ever faced. Despite growing agreement that the negative effects of climate change are real and are fast approaching, the policy efforts are yet to effectively tackle the issue. The most popular answer to the question why global warming and climate change is such a difficult problem to solve is that the issue has the characteristics of a wicked problem. However, the popularity of this rhetoric often shifts attention away from limitations of the decision-making process itself. A closer look at the policymaking process reveals that when faced with issues like climate change which are riddled with ambiguity and uncertainty, the decisionmakers tend to end up with non-optimal policy choices. This points towards inherent limitations in the decision-making process. 

Any attempt to understand why global efforts to solve climate change remains in an impasse should also enquire into how decisionmakers make judgments and decisions when faced with uncertainty. The seminal work of Daniel Kahneman and Amos Tversky on heuristics and biases offers an interesting framework that could be applied in this respect. According to Tversky and Kahneman (1974), individuals tend to rely on heuristics or mental shortcuts to reduce complex decisions to simpler judgmental operations. Three such key heuristics are representativeness heuristic, availability heuristic and adjustments and anchoring. However, when faced with uncertainty, these heuristics could cloud the judgment and lead to erroneous decisions. 

Representativeness heuristic refers to the situation where the degree of resemblance guides probability evaluation in decision-making. When encountered with situation A, its resemblance to situation B leads the decisionmaker to base the judgments on stereotypes about B. In climate change policy, this occurs due to the tendency to treat global warming as a typical environmental problem (Victor,2011). The solution to environmental problems typically involves small technological shifts and simple regulatory policies. This does not work in case of the greenhouse gas emissions issue, which is fundamentally a global, inter-temporal problem with extreme uncertainty about the effects on both the economy and environment. Identifying the global warming issue as an environmental issue also means that there is an immediate tendency to apply solutions that have worked in case of environmental problems. This is also a problem of identification (Jones, 2003) in which people identify readily with previous solutions. One major example in this respect is the influence of ozone regulation efforts. As the ozone regulation efforts were largely successful, there is an inherent tendency to rely on the same set of strategies ignoring the fact that the problem at hand is different and situations have evolved. The situation also leads to an ‘illusion of validity’ (Tversky and Kahneman, 1974). Armed with a high degree of representativeness, the decisionmakers have more confidence in their capacity to predict outcomes. This, in turn, leads to stronger adherence to current frameworks and reluctance to look for alternative solutions that might be better suited to the issue.

The second heuristic that Tversky and Kahneman talk about is the availability heuristic which refers to the tendency of people to base their judgments on instances or events that immediately comes to mind. For example, a policy actor with personal experience of a climate disaster tends to approach and present the problem very differently. Similarly, a government might interpret climate risks differently after being faced with a natural disaster. Even if the association of the extreme event with climate change is negligible, they might give more weightage to these low-probability events. The ‘biases of imaginability’ play a key role in the evaluation of probabilities (Tversky and Kahneman, 1974). While the ease of imagination tends to overestimate the probability, the lack of immediate experience can lead to underestimation of the risks. The myopic response of climate deniers in less affected developed countries has to be understood in this context. The availability heuristic also explains why certain highly visible policy interventions receive disproportionate attention over other interventions which may be more effective but less visible and less cognitively accessible. 

The third heuristic adjustments and anchoring occur when estimations start from an initial value (or an anchor) that is adjusted to yield the final answer. In other words, the starting point is already given, and adjustments are made (often insufficiently) based on this anchor. This bias creeps into climate change in multiple ways. One route is through the initial positions assumed by governments or decision makers. For example, at the international level, current positions assumed by many countries continue to be tied to their historical positions that were framed when the problem was initially conceived at the international stage. Though some might be consciously using it as a negotiating tactic, generally this has led to an anchoring effect in climate change platforms causing insufficient adjustments by involved parties. Similarly, despite the repeated failure to ensure compliance and enforce binding agreements, the UN-led architecture remains the dominant regime on which international climate policy efforts are anchored. This could be a reason why calls for shifting regulatory efforts to smaller influential groups are yet to gain traction in the international climate regime. The policy stasis commonly observed with respect to emission targets, threshold values, cost estimations etc. can also be attributed to anchoring effect.  Once a particular figure gains widespread traction, subsequent revisions tend to be incremental if not completely ignored. 

In the policy world riddled with uncertainty, complex decisions are inevitable. Policy makers have not much option but to rely on their heuristics from time to time. The way forward is not to abandon them altogether but to be better aware about the biases and systematic errors they lead us into.