I have yet to focus, in detail, on any particular kind of nudge. We can make more progress, and avoid the trap of abstraction, if we explore the ethical issues in a particularly controversial area: environmental protection. In that area, choice architecture has prompted a great deal of recent discussion, with intense focus on ethical questions, not least because of the problem of climate change. One of the distinctive features of environmental problems is that they typically involve externalities, as when the decisions of producers or consumers inflict harms on third parties (in the form, say, of air pollution, water pollution, or waste).
We have seen that while many nudges are meant to reduce the risk that people's decisions will impair their own lives, many other nudges are designed to prevent people from harming others. Such externality-reducing nudges might be a complement to mandates or bans, or corrective taxes; they might be a substitute for them. In either case, the environmental context is an important and illuminating one for considering the ethical issues. Let us now undertake a kind of case study, focusing on possible uses and abuses of choice architecture in that context.
Suppose that in a relevant community, there are two sources of energy, crudely denominated “green” and “gray.” Suppose that consistent with its name, “green” is much better than gray on environmental grounds. Those who use green energy emit lower levels of greenhouse gases and of conventional pollutants. Suppose that those who use gray energy save money. Which will consumers select, if they are specifically asked to make a choice?
The obvious response is that the answer will depend on the magnitude of the relevant differences. Suppose that green energy is far better than gray on environmental grounds and that gray energy costs only very slightly less. If so, consumers will be more likely to choose green energy than if it is only slightly better on environmental grounds and if it costs far more. Individual preferences certainly matter. Across a reasonable range of imaginable differences in magnitudes, we would expect to see a great deal of diversity across people, nations, and cultures.