Author： Allcott Hunt Taubinsky Dmitry
Publisher： American Economic Association
ISSN： 0002-8282
Source： The American Economic Review, Vol.105, Iss.8, 2015-08, pp. : 2501-2538
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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.
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