TY - JOUR
T1 - The welfare effects of nudges
T2 - A case study of energy use social comparisons
AU - Allcott, Hunt
AU - Kessler, Judd B.
N1 - Publisher Copyright:
© 2019 American Economic Association.
PY - 2019
Y1 - 2019
N2 - "Nudge"-style interventions are often deemed successful if they generate large behavior change at low cost, but they are rarely subjected to full social welfare evaluations. We combine a field experiment with a simple theoretical framework to evaluate the welfare effects of one especially policy-relevant intervention, home energy social comparison reports. In our sample, the reports increase social welfare, although traditional evaluation approaches overstate gains because they ignore significant costs incurred by nudge recipients. Overall, home energy report welfare gains might be overstated by $620 million. We develop a prediction algorithm for optimal targeting; this approach would double the welfare gains.
AB - "Nudge"-style interventions are often deemed successful if they generate large behavior change at low cost, but they are rarely subjected to full social welfare evaluations. We combine a field experiment with a simple theoretical framework to evaluate the welfare effects of one especially policy-relevant intervention, home energy social comparison reports. In our sample, the reports increase social welfare, although traditional evaluation approaches overstate gains because they ignore significant costs incurred by nudge recipients. Overall, home energy report welfare gains might be overstated by $620 million. We develop a prediction algorithm for optimal targeting; this approach would double the welfare gains.
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U2 - 10.1257/app.20170328
DO - 10.1257/app.20170328
M3 - Article
AN - SCOPUS:85062553355
SN - 1945-7782
VL - 11
SP - 236
EP - 276
JO - American Economic Journal: Applied Economics
JF - American Economic Journal: Applied Economics
IS - 1
ER -