Reducing greenhouse gas emission poses a huge challenge for many countries, specifically due to
the potential adverse welfare effects. As individuals take decisions with long run consequences, it is
difficult for them to adapt their CO2 emissions in the short run (e.g. changing commuting due to
decisions about where to live and where to work). More specifically, attention is devoted to the role
of preferences in the decision making process: do individuals follow their preferences? If this is not
the case, then changes can be proposed that both benefit the environment (lower CO2 emissions)
and welfare/well-being.