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Prices versus nudges: What matters for search versus purchase of energy investments?

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  • Holladay, Scott
  • LaRiviere, Jacob
  • Novgorodsky, David
  • Price, Michael

Abstract

We report the results of a field experiment where we exogenously vary the use of social comparison “nudges” and subsidies for participation in an in-home energy audit program. We follow subjects through to subsequent purchase of durable goods. We therefore can compare the causal effect of financial incentives and nudges along two margins: audits, which we liken to search, and purchase of durables. Using data on nearly 100,000 households we document that both prices and nudges cause a statistically significant increase in audits. Comparing point estimates, effective nudges are worth roughly $50–$70. However, we find that neither nudges nor subsidies do not significantly impact installations.

Suggested Citation

  • Holladay, Scott & LaRiviere, Jacob & Novgorodsky, David & Price, Michael, 2019. "Prices versus nudges: What matters for search versus purchase of energy investments?," Journal of Public Economics, Elsevier, vol. 172(C), pages 151-173.
    • Handle: RePEc:eee:pubeco:v:172:y:2019:i:c:p:151-173
    DOI: 10.1016/j.jpubeco.2018.12.004
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    4. Uddin, Main & Wang, Liang Choon & Smyth, Russell, 2021. "Do government-initiated energy comparison sites encourage consumer search and lower prices? Evidence from an online randomized controlled experiment in Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 167-182.
    5. Matilde Giaccherini & David Herberich & David Jimenez-Gomez & John List & Giovanni Ponti & Michael Price, 2020. "Are Economics and Psychology Complements in Household Technology Diffusion? Evidence from a Natural Field Experiment," Natural Field Experiments 00713, The Field Experiments Website.
    6. Jens Schubert, 2023. "The Effect of Gender on Study Effort: Nudges Versus Market Incentives," The American Economist, Sage Publications, vol. 68(1), pages 24-44, March.
    7. Jeremy West & Robert W. Fairlie & Bryan Pratt & Liam Rose, 2021. "Automated Enforcement of Irrigation Regulations and Social Pressure for Water Conservation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(6), pages 1179-1207.
    8. Gilbert, Ben & LaRiviere, Jacob & Novan, Kevin, 2022. "Uncertainty and additionality in energy efficiency programs," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    9. Kong, Dongmin & Yang, Xiandong & Xu, Jian, 2020. "Energy price and cost induced innovation: Evidence from China," Energy, Elsevier, vol. 192(C).
    10. Spandagos, Constantine & Baark, Erik & Ng, Tze Ling & Yarime, Masaru, 2021. "Social influence and economic intervention policies to save energy at home: Critical questions for the new decade and evidence from air-condition use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
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    12. Bonan, J. & Cattaneo, C. & d’Adda, G. & Galliera, A. & Tavoni, M., 2024. "Widening the scope: The direct and spillover effects of nudging water efficiency in the presence of other behavioral interventions," Journal of Environmental Economics and Management, Elsevier, vol. 127(C).
    13. Brick, Kerri & De Martino, Samantha & Visser, Martine, 2023. "Behavioural nudges for water conservation in unequal settings: Experimental evidence from Cape Town," Journal of Environmental Economics and Management, Elsevier, vol. 121(C).
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    More about this item

    Keywords

    Information; Social comparison; Public goods; Durable goods;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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