Judgmental Discounting and Environmental Risk Perception: Dimensional Similarities, Domain Differences, and Implications for Sustainability


*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].


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.