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Policy prescriptions for sustainable consumption have been dominated by neoclassical economics, which is built around the notions of market equilibrium, utility maximization, and exogenous preferences. There are concerns that neoclassical economics is inadequate to guide policy prescriptions in the presence of evolving preferences and complex dynamics. Evolutionary economics provides a more realistic account of individual behavior underlying economic processes. It offers a framework for studying complex socio-economic interactions and exploring their properties. As a consequence, it may offer a better approach for the analysis of policies aimed at inducing fundamental changes in behaviors, technologies and institutions in the direction of increased sustainability. However, a coherent evolutionary-economic approach to economic policies has been missing so far. In particular, policy criteria for evaluating evolutionary outcomes and processes are ambiguous. The paper discusses the implications of employing the evolutionary-economic approaches to study sustainable consumption and policy from different ethical standpoints.

Increasing consumption driven by growth in real income in industrial countries has been a source of environmental degradation and stress, placing sustainable consumption high on the political agenda (Jackson and Michaelis, 2003, Jackson et al., 2004 and Witt, 2011). Many sustainability policies focus on the improvements in resource productivity and eco-efficiency of processes and products (Mont and Plepys, 2008). However, technological change or improvements in resource productivity alone are unlikely to bring about structural changes in the economy much needed to curb greenhouse emissions (UNEP, 2010). For instance, energy savings from the improvements in energy efficiency have been offset by an increase in output in the past (Sorrell and Dimitropoulos, 2007). In this context, the transition to sustainability is likely to require wider changes in behaviors, technologies, values and worldviews (Beddoe et al., 2008). Designing sustainability policies requires a theory of consumer behavior which would deal realistically with how individuals respond to novelty (Nelson and Consoli, 2010), how habits and practices emerge and constitute a ‘normal way’ of life (Shove, 2004), and account for the evolution of wants and socially-constructed desires (Witt, 2011). So far, policy analysis has been dominated by neoclassical economic thinking, which ignores these aspects of consumer behavior. There are concerns that neoclassical economics is inadequate to guide policy prescriptions in the presence of evolving preferences, complex socio-economic interactions and deep uncertainty (e.g.Akerlof and Shiller, 2009, Farmer and Foley, 2009, Gowdy, 2004, Gowdy, 2005, Ostrom, 2008 and van den Bergh and Kallis, 2009). It focuses on exogenous preferences and static equilibrium outcomes, and thus ignores preference change and possible long-term effects of implemented policies. Evolutionary economics offers a good starting point to think about developing an alternative approach for the analysis of policies for sustainable consumption. This is because evolutionary economics provides a more realistic account of individual behavior, social interactions, evolving preferences and habit formation than neoclassical economics (Hodgson, 1988). Yet, before evolutionary economics can offer a sound framework for policy evaluation, it requires further theoretical refinements, especially with respect to its normative underpinnings. Over the last 20 years, evolutionary economists have focused on employing the evolutionary perspective, concepts and formal methodologies for framing economic dynamics (for an overview see Malerba, 2007, Safarzyńska and van den Bergh, 2010a and Texteira and Silva, 2010). As a result, descriptive approaches for economic analysis have been well established in fields such as industry dynamics, diffusion of innovations, and endogenous growth theory (e.g. Malerba et al., 2001, Nelson and Winter, 1982 and Silverberg et al., 1988). Evolutionary economists often emphasize the need for flexible institutional structures that can accommodate and fuel the process of evolutionary change (Hodgson, 1984, Hodgson, 1988, Metcalfe, 1998 and Witt, 2003). However, guiding structural and behavioral changes in the economy may come at social and environmental costs (van den Bergh and Kallis, 2009). Criteria employed to justify policy objectives and methods of their evaluation are hardly ever discussed in evolutionary-economic papers. In fact, it is not clear which ethical theories match well evolutionary dynamics and how to evaluate individual and social welfare from the evolutionary perspective (Freytag and Reynaud, 2007, van den Bergh and Kallis, 2009 and Witt, 2003). Yet, these questions are important if evolutionary economics is to deliver policy lessons. This is because different policy criteria entail (implicitly or explicitly) different views on what is good for the individual and society. The purpose of this paper is to show that (1) sustainable consumption requires a dynamic framework to study long-term consequences of policies and that evolutionary economics has already offered one; and (2) evolutionary economics can adopt different ethical foundations for policy evaluation. We will discuss the implications of employing different ethical theories to study sustainability policies in evolutionary economics. Different notions of the individual in economic theories determine specific sets of character traits in the ideal case, and thus different aspects of behavior which can be subject to policy interventions, and which are considered desirable. For instance, in neoclassical economics, a rational agent capable of optimizing his choices constitutes such an ideal case. Here, policies focus on identifying the optimal array of social policies and institutions to help individuals optimize their decisions. In the paper, we discuss how individuals are conceptualized in evolutionary economics. We compare policies for sustainable consumption, based on neoclassical and evolutionary models, from different ethical standpoints. The remainder of this paper is as follows. Section 2 discusses an evolutionary-economic framework. Section 3 provides an overview of ethical theories which can be applied to study sustainability policies. It compares policy prescriptions for sustainable consumption in neoclassical and evolutionary economics from different ethical perspectives. Section 4 concludes.

The choice of economic policies is ultimately an ethical problem. Economists regard the ethical foundations of economics as a settled matter, since they were constituted five decades ago (Dagsputa, 2005). In particular, neoclassical economics dominates economic policy prescriptions on a variety of critical issues, including climate change and policies for sustainable consumption. Typically, economic policies are evaluated based on their welfare consequences, where welfare is often explicitly or implicitly equated with consumption. The inducement of new preferences by innovations, social influences or advertising creates difficulty in interpreting growing standards of living through the traditional preference satisfaction view (Blinder and Witt, 2011). Sensory utilitarianism has been suggested as better matching evolutionary dynamics than classical utilitarianism in welfare analysis. Still, there are concerns that subjective utility may be inadequate for policy analysis. People can adapt to unfavorable circumstances, while social influences may escalate their wants beyond environmentally sustainable levels. Adopting alternative (to utilitarian) ethical foundations in policy analysis may entail re-defining the notion of sustainable consumption: by asking whether we are consuming for good reasons, how consumption affects the opportunities of individuals to flourish, and whether consumption activities within specific practices are sustainable. The deontological perspective requires that individuals comply with moral norms. Institutions and norms constrain opportunistic behaviors, where individuals do not follow norms voluntarily. Because of differences between behavioral assumptions in neoclassical and evolutionary models, these theories suggest different types of policies for sustainable consumption. Neoclassical economics typically limits deontological ethics to rights concerning property and contracts supporting market functioning. On the other hand, the evolutionary economics encourages policies aimed at regulating status-seeking and conformist behaviors, or disturbing unsustainable habits and routines. From this perspective, sustainable consumption requires consuming for good reasons, such as concerns for the environment and others. Evolutionary economics explains the evolution of social norms and institutions and how they affect individual behavior. It can accommodate virtue ethics as its ethical foundations. Virtue ethics seeks policies which can contribute to forming good virtues. On the other hand, the evolutionary framework allows us to ask which policies enhance good habits contributing to human flourishing. Whereas in the consequential ethics, sustainable policies seek for the optimal acts or rules which maximize welfare or other policy objectives, “deontological” policies aim at identifying ideal rules and acts, virtue ethics justifies policies which contribute to forming virtues and good habits. Evolutionary economics can provide a better approach for policy evaluation than standard welfare economics, especially, in case policy measures affect moral motivations and values of individuals, or they can induce changes in consumer preferences. Still, before evolutionary economics can offer a coherent policy framework, more research is needed concerning its normative underpinnings. Such endeavor is important as policy analysis involves value judgments on what is good for the individual and society. This in turn determines policy recommendations.