Motivated Reasoning and the Political Economy of Climate Change Inaction

TL;DR

This paper models how motivated reasoning by voters influences climate policy decisions in electoral politics, showing that belief distortions can lead to policy inaction or effective responses depending on perceived climate risks.

Contribution

It introduces a game-theoretic model capturing motivated reasoning and belief distortions in climate policy voting, highlighting conditions for policy inaction or effective action.

Findings

Voters ignore adverse climate information when losses are high, leading to policy inaction.

Moderate losses can lead to an equilibrium with informed voting and effective policies.

Belief distortions and expectations about policy responsiveness jointly influence climate policy outcomes.

Abstract

We study how motivated reasoning affects the provision of climate policy in an electoral competition framework. Voters experience anticipatory disutility when future outcomes appear grim and may therefore distort beliefs in response to adverse information. We develop a game-theoretic model in which voters and politicians receive signals about the severity of climate change. When the anticipated welfare losses from severe climate change are sufficiently large, voters optimally ignore unfavorable information, inducing politicians to campaign on policies appropriate for mild climate change only. When welfare losses are moderate, the model admits a second, efficient equilibrium in which voters trust politicians to implement welfare-maximizing policies and vote informatively, thereby creating incentives for politicians to propose adequate climate policy. The model shows how motivated belief formation and voters' expectations about policy responsiveness jointly determine equilibrium selection between effective climate policy and persistent political inaction.