Endogenous Preferences, Environmental Law

The rise of behavioral economics has important implications for the study of government regulation. Above all, the endogeneity of preferences offers a large area for positive work. Some environmental outcomes can be explained by status quo bias and the endowment effect. These phenomena help account for the asymmetry between old and new risks and the public antipathy toward strategies that create incentives to decrease use of automobiles. Both private and public behavior in the environmental context are an outgrowth of the fact that environmental preferences are endogenous to available opportunities, to shifting social norms, and to past acts of consumption.