To encourage people to pay their taxes on time, they experimented with various versions of a
reminder letter sent to people who hadn’t yet paid their taxes. Making the letter as simple as
possible did not significantly affect response rates. However, response rates nearly doubled when
people were reminded of social norms such as “9 out of 10 people pay their taxes on time.” This
illustrates that people’s behavior can be influenced when they are nudged to think of themselves
in comparison to others.
As another example, government officials in Bogotá, Colombia, initially responded to a
water shortage by sending residents information about the crisis and asking them to reduce their
usage. Not only was the appeal ineffective, water consumption actually increased as many people
began stockpiling water. The government then changed its strategy, trying to make water
conservation a new social norm. They distributed free stickers with water conservation messages,
to be placed on faucets at offices and schools. Households with exceptional water savings were
presented with small awards and praised in the local media. This latter strategy proved to be much
more effective.
6.2 CONSUMPTION AND PUBLIC POLICY
While government regulations could help address the problem of overconsumption to an extent,
some people may argue that government intrusion into personal consumption decisions is
unwarranted. But current government regulations already influence consumer decisions—for
instance, high taxes on products such as tobacco and alcohol discourage their consumption to some
extent. On the other hand, subsidies are often used to increase the demand for certain products.
Buyers of new electric vehicles in the United States may be eligible to receive a $7,500 federal tax
credit, a subsidy that reduces the environmental externalities of transportation and encourages a
shift away from fossil fuels. Taxes and subsidies can be justified for several reasons, including as
a response to externalities or to achieve some social goal. Thoughtful regulations can encourage
people to make choices that better align with social and personal well-being. We now consider a
range of different policy ideas for responding to concerns about overconsumption.
Flexible Work Hours
One specific policy to reduce the pressure toward consumerism is to allow for more flexibility in
working hours. Current employment norms, particularly in the United States, create a strong
incentive for full-time employment. Employees typically have the option of seeking either a full-
time job, with decent pay and fringe benefits, or a part-time job with lower hourly pay and perhaps
no benefits at all. Thus, even those who would prefer to work less than full-time and make a
somewhat lower salary, say, in order to spend more time with their family, in school, or in other
activities, may feel the imperative to seek full-time employment. With a full-time job, working
longer hours with higher stress, one may be more likely to engage in “retail therapy” as
compensation.
Europe is leading the way in instituting policies that allow flexible working arrangements.
Legislation in Germany and the Netherlands gives workers the right to reduce their work hours,
with a comparable reduction in pay. Sweden and Norway give parents the right to work part-time
when their children are young. Such policies encourage “time affluence” instead of material
affluence. Juliet Schor argues that policies to allow for shorter work hours are also one of the most
effective ways to address environmental problems such as climate change.