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    Is Intrinsic Motivation Relevant to Environmental Policy?*

    By Erik Gawel, University of Bielefeld

    I. Introduction

    In the discussion on the rational choice model of individual behavior, one aspect has come intofocus in recent years, which has previously been addressed by social psychology: that decisionstaken by individuals are motivated by intrinsic factors and as such do not represent a (direct)response to exogenous incentives.1 Special attention is being paid to the aspect that the thesis pro-posed by economic theory, namely that a predictable behavior modification can be induced in indi-viduals by a variation of external incentives, must be qualified in terms of validity in view of theinteractions that occur with intrinsic motivations to act. Especially problematic in this respect is aninversion of typical response patterns: A reinforcement of the incentives provided by relative pricesdoes not necessarily lead to the anticipated reinforcement of ongoing behavior if, and insofar as, anintrinsic motivation is crowded out simultaneously.

    Even economists now seem to agree that psychological and motivational aspects are generally rele-vant to human behavior, particularly to environmental behavior. But what exactly does this implyin terms of the shaping of environmental policy by way of pricing and/or command-and-controlmeasures? This article will therefore not ask whether intrinsic factors are generally significant interms of human environmental behavior, but whether this undoubted fact permits any conclusionsconcerning the preferability of specific environmental policy programs and the corresponding in-struments in short: whether environmental policy, which is currently characterized by extrinsicintervention, should include intrinsic motivation in its considerations.

    Of particular concern in this respect is the question of whether policy recommendations based oneconomic theory regarding a rationally conceived environmental policy need to be revised in thelight of intrinsic motivation issues and the acknowledgement of its relevance for environmentalproblems. As the theoretical and instrumental discussion of past decades has shown, the questionAre Incentive Instruments as Good as Economists Believe? (Weck-Hannemann/Frey 1995) islikely to draw a skeptical response for a number of reasons; but does it also have to be viewed criti-cally when the reference is to the motivation underlying intrinsic behavior? Or, in concrete terms,does the recommendation made by environmental economics - though this can no longer claimuniversal validity2 namely, to address environmental problems by way of a systematic modifica-tion of relative prices, have to be qualified in view of environmental ethics, or even abandonedfor specific sectors, or at least reformulated in terms of the aims and range of applicability? The

    *This contribution originated in the research group Rationale Umweltpolitik Rationales Umweltrechtorganized by the Center for Interdisciplinary Research of the University of Bielefeld, Germany. It is based ona paper presented to the Committee for Environmental and Resource Economics of the Verein fr Socialpoli-tik on April 23-24, 1999 in Innsbruck, Austria. I am indebted to Hannelore Weck-Hannemann for valuablecomments.1 On the socially psychological discussion, see Deci 1975, among others; Deci/Ryan 1985; on the economicreception, see e.g. Frey 1997a with many additional references. On the environmental sector, Kelman 1981,69 ff., apparently the first to discuss this aspect explicitly.2 On this, see e.g. Oates 1990; Cropper/Oates 1992.

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    relevant literature provides affirmative answers to this question, albeit varying in degree.3 Thiscontribution aims to examine whether the motivation behind intrinsic behavior sets limits to therational external intervention in human environmental behavior (Weck-Hannemann 1999), andwhether recommendations, especially for more market incentives, in environmental protectionshould be revised accordingly.4

    II. On the role of intrinsic motivation in the environmental sector

    1. Intrinsic motivation in the rational choice model of individual behaviorThe concept of moral action may either refer to the motivation underlying behavior or to theexhibited results of behavior: When a specific action is inner-directed and to this extent does notrefer to an external influence (e.g. coercion, incentives etc.), one speaks of moral behavior in amore narrow sense; when an action is aimed at complying with moral codices, but results from anexternal (e.g. social) influence, one could speak of morally conformable behavior.5 For the pur-pose of our analysis, moral behavior may be equated with intrinsically induced behavior. Thisleaves untouched the aspect that intrinsic behavior may also be immoral and, conversely, thatmorally conformable behavior may also be externally induced by pressure or rewards for confor-mity, that is, of extrinsic origin.6 Nor does an intrinsic preference necessarily have to be rooted inmoral beliefs.7 Nevertheless, in the present context, we will use Freys assumption of a synony-mous meaning, although this will be gradually challenged in the following chapters.

    It should be noted that the phenomenon of an intrinsically motivated (moral) action is not part ofany orthodox economic theoretical assumptions about the behavior of rational, self-interested indi-viduals. This could suggest a distinction between a behavior that is anchored in environmentalethics and one induced by considerations driven by self-interest (Frey/Oberholzer-Gee 1996,213). For practical reasons, though, intrinsic motivations are integrated into the rational calculationof the decision-maker as an additional category of utility.8 Accordingly, individuals behavior isdetermined by the external benefit and external cost of decision options as well as by an additionalsource of benefit, that is, an inner satisfaction. Given the context of such a decision-making proc-ess, the motivation underlying intrinsic behavior of individuals with an average moral dispositionwill prevail only when the latter meet with low cost in the extrinsic sphere (Kirchgssner 1996, 3 See e.g. Frey 1992b, 399 ff.; Frey/Oberholzer-Gee 1996, 208, 230 ff.; Frey 1997a, 58 ff.; recently againWeck-Hannemann 1999, 81.4 This much has at least been suggested by Frey in his numerous works on the subject. Thus, political deci-sion makers should in some situations be moderate when using pricing and regulating instruments or evenrefrain from using them. (Frey 1997a, 101); under certain conditions, market instruments for environ-mental protection should not be used at all because they entail serious detrimental side effects (Frey 1997a,59). Frey/Oberholzer-Gee 1996, 208, even warn against the uncritical use of instruments based on pricemechanism and regulation for the protection of the natural environment. Recently and similarly, Weck-Hannemann 1999, 81.5 See e.g. Leschke 1996, 78f.; similarly, Vanberg 1997, 170 ff., who distinguishes between a behavior moti-vation that may be either ethical or self-interested and a socially desirable behavior.6 On the notions of moral and intrinsically motivated action, which are by no means identical, see, amongothers, Kirchgssner 1999; Gerecke 1999. In the context of this paper, however, we will, for the moment,adhere to Freys assumption of a synonymous meaning.7 On this, also Frey 1997b, 114 f.; he distinguishes several varieties of non-calculating or intrinsic motiva-tion, but in conclusion emphasizes: As internalized ethics constitutes an especially important sphere, I willbelow, beside intrinsic motivation, also speak of ethics.8 On this, see the principal-agent model in Frey 1997a, 27 ff. Similarly, Weck-Hannemann 1999, 73 ff.

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    1999):9 Moral action10 exceptional individuals excluded can be expected on average only in thecase of low-cost decisions: In the case of low cost in the sense of negligible consequences of anindividual decision for the individual concerned some elements which reflect social motives andmoral aspects [...], in particular, may affect the utility function. (Weck-Hannemann 1999, 78). Thetheory of low-cost decisions11 provides some clues as to the behavioral relevance of (environ-mental) ethics. For an overwhelming majority of economic subjects, ethical incentives thus repre-sent only a category of low utility, being a kind of minimal ethics (Kirchgssner 1996) of deci-sion makers who continue to be extrinsically sensitive.

    The low-cost argument has been a topic of the environmental policy discussion for some time12,serving, inter alia, to derive a negatively inclined demand function for environmental ethics:13

    When environmentally friendly behavior costs little, it tends to affect the behavior of environ-mental moralists whereas, when the cost of ecologically correct behavior increases, environmen-tally hostile decisions will increase, ceteris paribus. Given this state of affairs, economists arehardly surprised at the considerable gap between environmental behavior and environmentalconsciousness:14 From an economic perspective15, environmental consciousness and environ-mental ethics are neither necessary nor sufficient conditions for environmentally friendly behavior:There is environmentally adequate behavior even without environmental consciousness16, butalso which is worth emphasizing - environmental ethics without consequences in terms of action.The effective role of ethics is determined by extrinsic behavior incentives which include not only avariation in monetary pay-offs and the expenditure of time (as a cost), but also various forms ofsocial incentives, which may be of a non-monetary kind, but are definitely extrinsic by nature.17

    If there is a