Working Paper: NBER ID: w20910
Authors: Koichiro Ito; Takanori Ida; Makoto Tanaka
Abstract: Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy conservation during peak demand hours. Using household-level consumption data for 30-minute intervals, we find significant short-run effects of moral suasion, but the effects diminished quickly after repeated interventions. Economic incentives produced larger and persistent effects, which induced habit formation after the final interventions. While each policy produces substantial welfare gains, economic incentives provide particularly large gains when we consider persistence.
Keywords: moral suasion; economic incentives; energy conservation; field experiment; electricity demand
JEL Codes: D12; L11; L94; L98; Q4; Q41; Q5; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| moral suasion (A13) | short-run reduction in electricity usage (L97) |
| short-run reduction in electricity usage (L97) | low persistence of moral suasion (E71) |
| economic incentives (M52) | larger and more persistent reductions in electricity consumption (L94) |
| economic incentives (M52) | sustained behavior change in energy consumption (Q41) |
| economic incentives (M52) | habit formation in consumption post-intervention (D10) |
| economic incentives (M52) | long-term changes in consumption habits (D12) |