Do green business practices license self-dealing or prime prosociality? Cross-domain evidence from environmental concern triggers

Abstract

Prior research in psychology and behavioral economics provides mixed evidence of the effects of green business practices on workers’ subsequent ethics. While some studies find that sustainability initiatives spur additional prosocial behavior, other experiments document that engaging in environmentally friendly behavior induces moral licensing whereby workers justify self-serving, immoral actions. Using ride-level data from the New York City taxi market in a within-subjects design, we provide the first real-world, cross-domain test of these two theories and find evidence consistent with moral licensing. Specifically, we find that after exogenous shocks that spur environmental concern (e.g., receiving smog warnings), driving a hybrid vehicle increases the likelihood that a cabbie fraudulently overcharges their customers. These findings inform the literature on moral licensing and priming and are particularly relevant given the recent heightened demand for sustainable business practices.