Snapshot
- The way we perceive climate risk is fraught with competing demands, such as the lure of recent experience, a constantly moving climate baseline, and limits of our ability to model and perceive low-probability events.
- The concept of climate change being psychologically distant has been disproved – most people today see climate change as a here-and-now problem.
- Integrating the psychology of risk alongside mechanical methods of climate risk quantification may help us better understand how individuals perceive risk, while at the same time making us more effective communicators of this risk.
- These ideas are explored by Aon and UNSW Sydney in our latest insights.
This article is authored by Professor Ben Newell, Director of the Institute for Climate Risk and Response, UNSW Sydney, and Tom Mortlock, Senior Analyst, Aon
The Psychological Distance of Climate Change May Be Closer Than We Think
How do people think about climate change? A popular idea in psychology has been that people treat climate change as psychologically ‘distant’[1]. This is the notion that climate change is something that might happen in the distant future, in far off places, to other people.
Despite the intuitive appeal, more recent research undermines this view, finding that most people see climate change as happening now, and having concrete effects within their own lifetimes.[2]
Have Recent Weather Events in Australia Shaped Our Intuition on Climate Risk?
Given this new perspective, a natural question to ask is whether the psychological closeness of climate change is looming larger because of the increasing numbers of people being exposed to extreme weather events.
Selective media coverage of these climate events may also contribute to our perception of the immediacy and impact of climate change.[3]
Intuition vs Actuarial Methods of Assessing Climate Risk
Rationally, we know data should be the basis of our predictions about climate risks, so how do, or should, we reconcile our expectations derived from our experiences of climate events?
This interaction between intuitive and actuarial judgement is at the heart of the insurance industry. The datasets the industry has access to are infinitely richer than a few months’ worth of rainfall, and the models are infinitely more complex than a basic multiple regression.
But the human who is interpreting the output of those models is arguably just as susceptible to the psychological influences of recent experience – not to mention fatigue and distraction – as any other expert.
Climate Heuristics
Rather than assess the cold hard facts, we often assess risk via a heuristic process – breaking down a difficult question (“how exposed am I to flood risk?”) into simpler, more answerable – yet imperfect – questions (“have I ever experienced flood damage before?”).
In this process, recent experience may play an important role. Coupled to the potential effects of experience, humans are naturally risk-averse, placing more weight on losses than potential gains.[4]
The pervasive appeal of insurance is rooted to how we perceive risk, and more specifically our appetite to retain risk and avoid personal regret.
Integrating the psychology of risk alongside mechanical methods of climate risk quantification would help us better understand how individuals perceive risk, while at the same time making us more effective communicators of the risk we are transferring.
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The UNSW Institute for Climate Risk & Response is a new initiative designed to empower business, government, and society to address the risks and opportunities of climate change through interdisciplinary research, partnerships, and education.
[1] McDonald, Chai, Newell, 2015, Personal experience and the ‘psychological distance’ of climate change: An integrative review, Journal of Environmental Psychology, 44, 109-118.
[2] van Valkengoed, Steg, Perlaviciute, 2023, The psychological distance of climate change is overestimated, One Earth, 6, 362-391
[3] Perga, Sarrasin, Steinberger, Lane, Butera, 2023, The climate change research that makes the front page: Is it fit to engage societal action?, Global Environ. Change, 80, 102675
[4] Thinking, Fast and Slow by Daniel Kahneman – Penguin Books Australia
