Can Information-Based Policies Do More Harm than Good?

Abstract

Environmental policy has intensively focused on information-based instruments that seek to change agents' behavior through information provision. This information provision is generally considered as likely to ultimately improve environmental quality. We suggest a new and complementary way to consider information-based instruments. We formalize the insight that information provision differs from information impact by introducing the concept of informational elasticity. We show that beyond an optimum level, an additional information load, regardless of the information quality, could do more harm than good. Indeed, some perverse effects could occur, resulting in a worse overall impact. Several policy implications are stressed. Abstract: Environmental policy has intensively focused on information-based instruments that seek to change agents' behavior through information provision. This information provision is generally considered as likely to ultimately improve environmental quality. We suggest a new and complementary way to consider information-based instruments. We formalize the insight that information provision differs from information impact by introducing the concept of informational elasticity. We show that beyond an optimum level, an additional information load, regardless of the information quality, could do more harm than good. Indeed, some perverse effects could occur, resulting in a worse overall impact. Several policy implications are stressed.