A behavioral rebound effect

Abstract

Pro-environmental behaviors are an important avenue for mitigating environmental impacts. Technological improvements are also a vital tool for reducing environmental damage from consumption. However, their benefits are partially offset by the direct rebound effect, whereby a consumer rationally responds to an increase in resource use efficiency by consuming more. This paper investigates whether technological improvement might also reduce behaviorally motivated mitigation of environmental damage. A behavioral rebound effect operates through two channels. First, pro-environmental effort is reduced after a decrease in marginal environmental damage. Second, moral licensing reduces pro-environmental effort further when technological change is endogenous. I develop a novel real effort laboratory experiment to identify these behaviors. I find a positive behavioral rebound effect. I also find evidence consistent with moral licensing, which is strongest among subjects with a higher degree of pro-environmental attitudes and beliefs. Subjects’ baseline level of pro-environmental effort is driven by beliefs about social norms.