Individual behavior and collective action towards the environment: An economic framework based on the social customs approach

Environmental policy-making is often based on simple neoclassical economic models where human beings are treated in isolation from each other. In these models of atomized individual behaviour, the explicit consideration of social norms is ruled out. As a contribution to bridging the gap between simple economic theory and empirical evidence this paper re-interprets the 'social customs' approach, which was developed in the context of the labour market, and examines whether it is an adequate framework for explaining recycling behaviour of households. It assumes the existence of a particular social norm, plus a sensitivity of actors to their relative social standing dependent on perceived conformity to that norm. These assumptions are shown to partly offset purely economic parameters, which, by themselves, could prevent voluntary collective action towards the provision of a public good, such as environmental quality. The approach helps explain why individuals contribute to the provision of such a good and thus offers a partial escape from the free-rider problem. Nevertheless, this paper stresses that purely economic motives are important and should be addressed by policy-makers together with social motives.