Evaluating behaviorally motivated policy

Experimental evidence from the lightbulb market

Hunt Allcott, Dmitry Taubinsky

    Research output: Contribution to journalArticle

    Abstract

    Imperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. The main results suggest that moderate subsidies for energy-efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs. Our results and techniques generate broader methodological insights into welfare analysis with misoptimizing consumers.

    Original languageEnglish (US)
    Pages (from-to)2501-2538
    Number of pages38
    JournalAmerican Economic Review
    Volume105
    Issue number8
    DOIs
    StatePublished - Aug 1 2015

    Fingerprint

    Subsidies
    Energy efficiency
    Energy
    Economics
    Randomized experiments
    Imperfect information
    Information disclosure
    Welfare effects
    Welfare analysis
    Psychological
    Experiment
    Reduced form
    Energy cost
    Sufficient statistics

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Evaluating behaviorally motivated policy : Experimental evidence from the lightbulb market. / Allcott, Hunt; Taubinsky, Dmitry.

    In: American Economic Review, Vol. 105, No. 8, 01.08.2015, p. 2501-2538.

    Research output: Contribution to journalArticle

    Allcott, Hunt ; Taubinsky, Dmitry. / Evaluating behaviorally motivated policy : Experimental evidence from the lightbulb market. In: American Economic Review. 2015 ; Vol. 105, No. 8. pp. 2501-2538.
    @article{a2f351d888664a5d954296fc355a14aa,
    title = "Evaluating behaviorally motivated policy: Experimental evidence from the lightbulb market",
    abstract = "Imperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. The main results suggest that moderate subsidies for energy-efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs. Our results and techniques generate broader methodological insights into welfare analysis with misoptimizing consumers.",
    author = "Hunt Allcott and Dmitry Taubinsky",
    year = "2015",
    month = "8",
    day = "1",
    doi = "10.1257/aer.20131564",
    language = "English (US)",
    volume = "105",
    pages = "2501--2538",
    journal = "American Economic Review",
    issn = "0002-8282",
    publisher = "American Economic Association",
    number = "8",

    }

    TY - JOUR

    T1 - Evaluating behaviorally motivated policy

    T2 - Experimental evidence from the lightbulb market

    AU - Allcott, Hunt

    AU - Taubinsky, Dmitry

    PY - 2015/8/1

    Y1 - 2015/8/1

    N2 - Imperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. The main results suggest that moderate subsidies for energy-efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs. Our results and techniques generate broader methodological insights into welfare analysis with misoptimizing consumers.

    AB - Imperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. The main results suggest that moderate subsidies for energy-efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs. Our results and techniques generate broader methodological insights into welfare analysis with misoptimizing consumers.

    UR - http://www.scopus.com/inward/record.url?scp=84930574384&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=84930574384&partnerID=8YFLogxK

    U2 - 10.1257/aer.20131564

    DO - 10.1257/aer.20131564

    M3 - Article

    VL - 105

    SP - 2501

    EP - 2538

    JO - American Economic Review

    JF - American Economic Review

    SN - 0002-8282

    IS - 8

    ER -