The interplay between intrinsic motivation, financial incentives and nudges in sustainable consumption

Abstract

In this chapter, the authors review and discuss the drivers that affect sustainable consumption by focusing on behavioural interventions employed in public policies by private organizations and governments. They differentiate interventions that may promote intrinsic (pro-environmental or prosocial) motivation from those that consider extrinsic factors, such as financial incentives and reputational motivation. They also discuss how policy tools, called nudges, can affect behaviour without a substantial change in the available choice set or its associated economic incentives. They find that the effect of providing financial incentives on sustainable consumption is mixed, and that financial incentives may mobilize non-economic drivers in a similar way to nudges. These considerations invite a closer examination of what is considered intrinsic motivation in the domain of sustainable consumption and how it should be measured, as well as how green financial incentives can be structured and framed in a way that favour nudging effects as well as purely economic price effects.