Dyson School 4580/6580

The Economics and Psychology of

SUSTAINABLE BUSINESS
Course Information
Instructor: William Schulze (wds3)
TAs: Pim Rusmevichientong (pr223@cornell.edu)
Jubo Yan (jy489@cornell.edu)
Lauren Schrader (lvs28@cornell.edu)
Meets Tuesday and Thursdays from 8:50-9:55 pm
CMH A106
Office Hours: Tuesday 10:00-11:30
Warren 141




Course Information


The course requirements include one paper for undergraduates and
two papers for graduate students (50%) and a final exam (50%).

Extra credit will be given for participation in relevant behavioral
economics experiments.

Graduate students will also be assigned
additional journal article readings.


Required Texts
Environmental Law Stories, edited by Richard
Lazarus and Oliver Houck, $40.

Strategies for the Green Economy: Opportunities
and Challenges in the New World of Business by
Joel Makower, $27.95.


EXAMPLE: TOMS SHOES

Mycoskie got the idea for TOMS Shoes when he
visited Argentina and saw many children who had
no shoes. At the same time, many adults in that
country were wearing a very simple yet comfortable
shoe that caught Mycoskie's eye. Mycoskie's new
company, TOMS Shoes, adopted that shoe style,
produced it in many styles and colors, and promised
customers that for every pair of shoes they bought,
another pair would go to children in need. The idea
took off and now Mycoskie spends half of his time
on his business and the other half flying around the
world making "shoe drops" to smiling kids all over
the word. (September, 2009, Success magazine)
TOMS Shoes embodies several lessons for others who
want to combine doing good with business:

1) Ride a trend. In this case TOMS Shoes intersected with the rise in consumers who have become more
conscious about their spending. They are willing to spend for consumer goods that also do some good in
the world. The rise in cause-related marketing has been spectacular, benefiting many causes as well as
helping companies polish their reputations as good corporate citizens.
2) Bake in the good. TOMS Shoes goes beyond what other companies do. It is founded on the premise
that sales equal the good done. Mycoskie said, "...we know every day that we're going to give away one
pair of shoes for every one we sell, and that's that. If we can't make the business work that way, then the
business just doesn't work."
3) Build in sustainability. Mycoskie says of his premise, "If I would've taken half a million dollars and just
bought shoes to give to the kids, I would've been able to give the shoes once. It never would've been as far-
reaching and sustainable as TOMS Shoes is now."
4) Give employees something to be proud of. Mycoskie says that the employee morale at TOMS Shoes is
phenomenal. "..how could you be down when you know everything you do makes children happy?" he
says.
5) Attach a story to your product. Give your customers a story that they can retell again and again. These
shoes are unique enough to garner attention, and the wearer can boast about the fact that they are from
TOMS Shoes, and here is what it means. Buyers feel good about their purchase and want to tell their
friends. TOMS Shoes are cool and create buzz.
EXAMPLE: BP
Sold itself as a Green
company (Greenwashing)
In fact, BPs practices were
among the worst in the
industry
Why, from a management
perspective, did the accident
happen?
Why has the unprecedented
response by BP failed to
convince the public?

QUESTIONS
When, if, and how can firms make money by going
green?
How can you as a manager prevent costly
environmental penalties, damage to the company
reputation, and lawsuits?
To answer these questions requires a knowledge of
economics, psychology, and law.
COURSE OUTLINE
Insights from economics and environmental
economics
Insights from psychology and behavioral economics
Environmental law and case studies
Major issues in sustainable business such as
greenwashing, profitability of sustainable practices,
green marketing, etc.
Case studies.
PLAN FOR COURSE
New course so anything may change as we get into
the course including incorporating your ideas and
suggestions!
Lectures and experiments.
You will be required to write up and present at least
one case study in class.
Final exam