Behavioural Law & Economics and Sustainable Regulation

Abstract

Non-legal disciplines increasingly are discovering the power of learning. Neither should the law, both in scholarship and regulatory practice, hesitate to tap this precious resource as well. Such an undertaking would seem particularly fruitful in environmental law. This chapter aims to contribute to this process by making six distinctive claims.

First, we show how environmental regulation has moved from traditional command-and-control regimes, then to market-based regulation, and now to green nudging. This development can be traced to a consonant evolution of the particular interdisciplinary theory on which the law draws. Command-and-control and market-based regulation are backed by rational choice theory , while green nudging incorporates behavioural economics into regulation. However, both neoclassical market theory and behavioural interventions often ignore the importance and preconditions of learning. Second, green nudging in particular suffers from a focus on short-term effectiveness . Although a number of studies empirically testing nudges have found that the lack of sustainability over time does not equally affect all types of nudges, it is apparent in green nudges such as notices, reminders, and graphic labels. The impermanence of behavioural change is a serious concern for these types of intervention. Learning theory could help remedy these problems. We therefore, third, argue that the methodological reach of behavioural law and economics should be expanded to include social psychology and behavioural game theory which have studied learning for decades. Moreover, fourth, the normative focus of nudging should be shifted, particularly for environmental law, from welfare to fairness, public good orientation, and concerns for the environment. With this in mind, fifth, institutions such as regulatory agencies or private companies could include specific structures to facilitate what we have called systemic learning , i.e., learning which takes the interdependence of individual and institutional learning seriously. Examples of such structures are regular feedback loops, both for nudgees and regulators, as well as institutional systemic learning facilities such as learning task forces. Finally, we call for the establishment of an Agency for Systemic Learning Management to coordinate learning efforts between different agencies and private players.