Working Paper: NBER ID: w21187
Authors: Hunt Allcott; Cass R. Sunstein
Abstract: This paper offers a framework for regulating internalities. Using a simple economic model, we provide four principles for designing and evaluating behaviorally-motivated policy. We then outline rules for determining which contexts reliably reflect true preferences and discuss empirical strategies for measuring internalities. As a case study, we focus on energy efficiency policy, including Corporate Average Fuel Economy (CAFE) standards and appliance and lighting energy efficiency standards.
Keywords: No keywords provided
JEL Codes: D03; D04; D10; D18; D61; D83; H21; K0; K20; L51; L94; Q48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| paternalistic regulation (G18) | increase welfare (I38) |
| government intervention (subsidies) (L59) | correct internalities (D62) |
| energy efficiency standards (Q41) | welfare gains (D69) |
| reducing biases (present bias and inattention) (D91) | increase welfare (I38) |
| targeting subsidies based on average marginal bias (H23) | better outcomes (I14) |
| well-informed, considered, and active choices (D87) | identify true preferences (D11) |
| identifying true preferences (D11) | refine welfare analysis (D69) |