Big, heavy vehicles like SUVs don’t make a whole lot of sense for most people. Your average driver isn’t going off-road. A third row of seats is very rarely necessary. They take more gas. And, if you’re hit by an SUV in a sedan, you’re more likely to die. So, why are SUVs so common? Economist Robert Frank argues it boils down to peer pressure. As some people started buying SUVs, their neighbors began to as well. It’s the core premise of his new book, Under the Influence: Putting Peer Pressure to Work. Recently, Frank sat down with UC Berkeley Goldman School of Public Policy professor Dan Kammen to discuss how this concept can be used to fight climate change.
Frank says in order to implement policies that would have a major impact on climate change we need to tackle, “the mother of all cognitive illusions.” The illusion is that requiring higher taxes of the rich would harm them in some way. Frank argues this simply isn’t true using a series of thought experiments. He asks the audience to imagine being rich in two different worlds, a high-tax world, and a low-tax world. The low-tax rich might drive a $300,000 Ferrari, while the high-tax rich might drive a $150,000 Porsche. But, in the high-tax scenario, the roads are maintained at a much higher standard. So, who is happier, the people driving Ferraris over potholes or those driving Porches on pristine streets? In Frank’s opinion, it’s clear that the Porsche owners would be happier. Frank expands on this example, explaining how we could implement higher taxes on the wealthy to pay for decarbonizing the economy, without requiring any meaningful sacrifice.