Following the previous post, there is a strong link between green growth and belief economics.
Consider Gordon, the guy who has 10 quid in his pocket which he saved on energy bills because he put in insulation. What he does with that cash determines how big the rebound effect will be.
So how do you get Gordon to spend that cash on the guitar lesson rather than on petrol for his car?
One way is to tax petrol a lot until it is not worth his while to set foot in the car.
Another way is to get him to desire immensely to learn the guitar.
We know how to achieve the first alternative, but we also know that is politically unappealing.
I don’t think we know much about how to achieve the second alternative. This is where significant policy research should go; to answer the question: How can you ethically get Gordon willingly and joyfully to do low-carbon things without taxing the hell out of him?