Working Paper: NBER ID: w19713
Authors: Hunt Allcott; Dmitry Taubinsky
Abstract: Imperfect information and inattention to energy costs are important potential justifications for energy efficiency standards and subsidies. We evaluate these policies 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. In the context of the model, 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.
Keywords: energy efficiency; consumer behavior; randomized experiments; CFLs; incandescent lightbulbs
JEL Codes: D03; D12; H21; H31; L94; Q41; Q48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Banning incandescents (G18) | Welfare losses (D69) |
| Optimal subsidy for CFLs (H21) | Welfare gains (D69) |
| Provision of information (L86) | Market share of CFLs in retail setting (L81) |
| Willingness to pay for CFLs (D19) | Market share of CFLs (L68) |
| Provision of information (L86) | Willingness to pay for CFLs (D19) |
| Provision of information (L86) | Market share of CFLs (L68) |