Money or Morals: Behavioural Insights and the Environment

Money and Morals Behavioural Insights and the Environment

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Experts are racing against the clock to mitigate environmental degradation. In addition to using science and technology to reduce our impact on the environment, policymakers are also looking into consumer behaviour – how can we incentivise people to reduce their consumption and conserve resources?

Assoc. Prof Leong Ching, Co-Director, Institute of Water Policy, Lee Kuan Yew School of Public Policy at the National University of Singapore, set out to investigate the impact of various incentives and disincentives to motivate water conservation in 1,000 Singaporean households.

On 4 September 2019, Assoc Prof Leong shared the results of her field experiment where a sample of Singapore households were split into five groups: a control group, two groups receiving different normative feedback, and two groups receiving normative feedback and monetary incentives.
She found that receiving periodic information with water saving tips or regular reminders played a significant role in promoting household water conservation. More interestingly, additional monetary incentives to conserve water had no additional significant effects  – people responded the same way whether they were given campaign messages or given campaign messages and money.

A simple campaign message or feedback can help us achieve almost half of the Singapore Government’s target of reducing water use from 143 litres to 130 litres per household by 2030.

Assoc Prof Leong then turned to behavioural economics to explain the findings of her field experiment.  Classical economic models assume that humans are rational and have fixed preferences, though these assumptions may not hold true in real life. The behavioural approach understands the constraints of classical economics, and how human judgement can affect our decision-making process.

She drew on Nobel Prize winner Daniel Kahneman’s idea of systems of thinking, fast and slow: System 1 is fast, instinctive and emotional, while system 2 is slower, deliberative, logical. System 1 happens in a split second; the decisions may even be subconscious. Thus, uncontroversial and necessary policies such as conserving water still need a lot of work and effort for the public to overcome their systems 1 biases and accept the policies. Signs and messages need to speak to the masses directly; because of common biases, even water conservation requires huge mental effort to understand and act upon.

If policymakers want to initiate change, they must make it easy cognitively to process and understand and speak to system 1 thinking. 

Assoc Prof Leong concluded the talk by suggesting that governments apply behavioural insights and use different policy tools to target different groups of water users. Cities like Jakarta and Bangkok are sinking because of over consumption of water – because of human activity. We all need to do our part before it’s too late.

The event ended with Assoc Prof Leong taking questions from the audience, which included ways insights from behavioural economics can be used to encourage socially conscious behaviour particularly towards issues of environmental sustainability.

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Mr Ho Swee Huat

Mr Ho Swee Huat is the Founder and Managing Director of Abacus Assets Advisors Pte Ltd. Before starting the company, he had an established career in the banking industry, with 20 years of experience in Singapore, Hong Kong and New York.

He was an Independent Director and Chairman of the Audit Committee of CapitaCommercial Trust Management LTD from 2004 to 2013.

He is the current Chairman of Autism Association (Singapore) which he co-founded with a group of parents in 1992. He is also Vice-Chairman of Eden School, a special school for children with autism.

Mr Ho holds a Master’s degree from the London School of Economics and Political Science, and a Liberal Arts degree in Economics from Hamilton College, USA.

He has been a member of the Board of the Foundation since its incorporation.