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New York University
Sample size: 1253
Field period: 09/07/2012-07/26/2013
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.
First, how much does information provision affect demand for CFLs?
Second, if powerful information provision is costly or infeasible, does a CFL subsidy or a ban on incandescents increase welfare as a second best solution to imperfect information and inattention?
The main manipulation is to provide energy cost and bulb replacement cost information for Compact Fluorescent Lightbulbs vs. incandescent lightbulbs.
Willingness-to-pay for lightbulbs, as measured with a multiple price list.
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.
Allcott, Hunt, and Dmitry Taubinsky. "The Lightbulb Paradox: Evidence from Two Randomized Experiments."