Consumer Behaviour with Environmental and Social Externalities: Implications for Analysis and Policy

Partha Dasgupta, Dale Southerton, Alistair Ulph*, David Ulph

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

22 Citations (Scopus)
189 Downloads (Pure)


In this paper we summarise some of our recent work on consumer behaviour, drawing on recent developments in behavioural economics, particularly linked to sociology as much as psychology, in which consumers are embedded in a social context, so their behaviour is shaped by their interactions with other consumers. For the purpose of this paper we also allow consumption to cause environmental damage. Analysing the social context of consumption naturally lends itself to the use of game theoretic tools. We shall be concerned with two ways in which social interactions affect consumer preferences and behaviour: socially-embedded preferences, where the behaviour of other consumers affect an individual’s preferences and hence consumption (we consider two examples: conspicuous consumption and consumption norms) and socially-directed preferences where people display altruistic behaviour. Our aim is to show that building links between sociological and behavioural economic approaches to the study of consumer behaviour can lead to significant and surprising implications for conventional economic analysis and policy prescriptions, especially with respect to environmental policy.

Original languageEnglish
Pages (from-to)191-226
Number of pages36
JournalEnvironmental and Resource Economics
Issue number1
Early online date28 Apr 2015
Publication statusPublished - 1 Sep 2016


  • Altruism
  • Competitive consumption
  • Consumer behaviour
  • Consumption norms
  • Environmental policy
  • Game theory
  • Kantian calculus
  • Moral behaviour
  • Social context


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