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
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U2 - 10.1257/aer.20131564
DO - 10.1257/aer.20131564
M3 - Article
AN - SCOPUS:84930574384
SN - 0002-8282
VL - 105
SP - 2501
EP - 2538
JO - American Economic Review
JF - American Economic Review
IS - 8
ER -