Conference Agenda

To achieve deep decarbonisation, the design of climate policy needs to account for consumption choices being influenced not only by pricing but also by social learning. This involves changes that pertain to the whole spectrum of consumption, likely involving shifts in lifestyles. In this regard, it is crucial to consider social learning not only in the short term but also slower and longer-term cultural change. Against this background, we analyse the interaction between climate policy and cultural change, focusing on carbon pricing. We extend the notion of “social multiplier” of environmental policy derived in an earlier study to the context of multiple consumer needs while allowing for behavioural spillovers between these, giving rise to a “cultural multiplier”. We develop a model to assess how this multiplier contributes to the effectiveness of carbon pricing. Our results show that the cultural multiplier stimulates a greater reduction in emissions compared to fixed preferences and the social multiplier. These findings are also good news for policy acceptance since the cultural multiplier greatly increases the effectiveness of a carbon price, meaning a lower price suffices for a given emissions-reduction goal. At high carbon prices, the distinction between social and cultural multiplier effects diminishes, as the strong price signal drives even resistant individuals toward low-carbon consumption. By varying economic and social conditions, such as substitutability between low- and high-carbon goods, social network structure, proximity of like-minded individuals, diversity of consumption lifestyles, and heterogeneity of preferences, the model provides insight into how cultural change can be leveraged to secure maximum effectiveness of climate policy.