Threshold Preferences and the Environment
type: Dataset
description: In this article we study the implication of thresholds in preferences. To model this we extend the basic model of John and Pecchenino (1994) by allowing the current level of environmental quality to have a discrete impact on how an agent trades off future consumption and environmental quality. In other words, we endogenize the semi-elasticity of utility based on a step function. We motivate the existence of the threshold based on research from political science, from arguments based on regulation and standards, cultural economics as well as ecological economics. Our results are that the location of the threshold determines both the potential steady states as well as the dynamics. For low (high) thresholds, environmental quality converges to a low (high) steady state. For intermediate levels it converges to a stable p-cycle, with environmental quality being asymptotically bounded below and above by the low and high steady state. We discuss implications for intergenerational equity and policy making. As policy implications we study shifts in the threshold. Our results are that, in case it is costless to shift the threshold, it is always worthwhile to do so. If it is costly to change the threshold, then it is worthwhile to change the threshold if the threshold originally was su ciently low. Lump-sum taxes may lead to a development trap and should be avoided if there are uncertainties about the threshold or the eff ectiveness of the policy.
issued: 2026-05-10T03:37:59.225013
language: en
modified: 2026-05-10T03:37:59.225017
contact point: Organization
  fn: CCSD
keyword: endogenous-preferences
keyword: environmental-quality
keyword: infoeu-reposemanticspreprint
keyword: jel-q---agricultural-and-natural-resource-economics--environmental-and-ecological-economicsqq2--
keyword: jel-q---agricultural-and-natural-resource-economics--environmental-and-ecological-economicsqq5--
keyword: keywords-thresholds
keyword: policy-intervention
keyword: preprints-working-papers-
keyword: shsecohumanities-and-social-scienceseconomics-and-finance
landing page: https://hal.science/hal-00850543

Threshold Preferences and the Environment
type: Distribution
format: HTML
issued: 2026-05-10T03:37:59.232524
modified: 2026-05-10T03:37:59.214840
access URL: https://hal.science/hal-00850543

test_moissonnage_selune
type: Agent