Efficiency neglect: why people are pessimistic about the effects of increasing population

Abstract

In six studies, we find evidence of efficiency neglect: when thinking about the effects of population growth, people intuitively focus on increased demand while neglecting the changes in production efficiency that occur alongside, and often in response to, increased demand. In other words, people tend to think of others solely as consumers, rather than as consumers as well as producers. Efficiency neglect leads to beliefs that the real costs of some consumer goods are rising when they are actually decreasing and may contribute to antiimmigration sentiments because of the fear that increasing local population creates competition for fixed resources. We demonstrate that economic pessimism and antiimmigration sentiments are reduced when people are prompted to consider their own beliefs about increased productivity over time, but are unchanged when they consider their beliefs about increases in demand. Together, these findings shed light on people’s lay economic theories and suggest promising interventions. (PsycInfo Database Record (c) 2024 APA, all rights reserved)