Informational Flows for Climate Change - Finanziamento dell’Unione Europea – NextGenerationEU – missione 4, componente 2, investimento 1.1.

Climate change is one of the most severe challenges that humankind is facing. As such, the topic is currently being tackled by different disciplines, through different angles and with different approaches. Economists joined this interdisciplinary endeavour by studying the social and economic consequences that extreme weather shocks generate, by investigating the relationships between catastrophic risks and financial instruments, by suggesting ad-hoc policies, investments and contracts. With this project, we aim at contributing to this joint effort by studying some specific factors that shape public opinion’s view about climate change and the response of the public sector to the related challenges. In fact, being a global problem, climate change requires global answers that must be rooted into individual behaviours. Information about the risks and consequences of climate change, the way this information circulates and the audiences that it reaches play a key role in determining how these “environmental social norms” evolve over time. These norms in turn influence the likelihood of success of policies designed to fight climate change, as well as behavioural changes aimed at dealing with climate related risks. We thus investigate the role of information flows in shaping agents’ attitudes toward climate change and how the resulting environmental social norms endogenously evolve, possibly in response to informational or structural shocks, and impact the real economy. The inclusion of strategic interaction is now considered central in the study of the optimal design of formal and informal agreements aimed at contrasting climate change. Referring to climate agreements, Harstad (2012) and Battaglini and Harstad (2020) state that such an analysis “will be immensely important" to "confront the global challenges ahead”. We will adopt an integrated approach that combines political economy and game theoretic methods with the empirical analysis of some specific aspects and implications that the theory highlights. More specifically, the project articulates into three lines of research that tackle different but related aspects of the problem. First, we study how public statements released by relevant players (politicians, activists, scientists) about the necessity / non-necessity to fight climate change shape the beliefs and the behaviours of a population of agents with heterogeneous attitudes toward environmental issues. Second, we investigate how standard metrics of engagement (likes, shares, retweets) attached to online messages about climate change that circulate through social networks can influence agents’ opinions on the issue, with a special focus on younger generations. Third, we consider some specific “real-economy” consequences of climate change by studying how public buyers react to severe weather events when designing procurement tenders so as to limit firms’ moral hazard behaviour that the increase in weather related risk originates.