Evaluating behaviorally motivated policy: Experimental evidence from the lightbulb market

Hunt Allcott, Dmitry Taubinsky

    Research output: Contribution to journalArticlepeer-review

    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

    ASJC Scopus subject areas

    • Economics and Econometrics

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