IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v88y2025i3d10.1007_s10640-024-00942-2.html
   My bibliography  Save this article

‘More Bang for the Buck’? Experimental Evidence on the Mechanisms of an Energy Efficiency Subsidy

Author

Listed:
  • Lara Bartels

    (Max Planck Institute for Research on Collective Goods
    ZEW - Leibniz Centre for European Economic Research)

  • Madeline Werthschulte

    (Vrije Universiteit
    ZEW - Leibniz Centre for European Economic Research)

Abstract

Environmental subsidies are a popular public finance instrument used to reduce carbon emissions. However, there is little evidence on the mechanisms underlying the demand response to the introduction of a subsidy. We use a framed field experiment to disentangle the relative importance of the price and non-price effects implicit in a subsidy encouraging an energy-efficiency investment. In the experiment, participants decide whether or not to purchase a low-flow showerhead and are either confronted with the introduction of a subsidy or a same-sized price decrease. We find a demand increase of about 3 percentage points when the price decreases and a significantly larger demand increase of about 9 percentage points when the subsidy is introduced. An analysis of the underlying channels rules out changes in beliefs and social norm perceptions. Positive spill-over effects of the subsidy on other pro-environmental behaviors rather suggest that the non-price effect is explained by a crowding in of intrinsic motivation.

Suggested Citation

  • Lara Bartels & Madeline Werthschulte, 2025. "‘More Bang for the Buck’? Experimental Evidence on the Mechanisms of an Energy Efficiency Subsidy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(3), pages 631-654, March.
    • Handle: RePEc:kap:enreec:v:88:y:2025:i:3:d:10.1007_s10640-024-00942-2
    DOI: 10.1007/s10640-024-00942-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10640-024-00942-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10640-024-00942-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Behavioral public economics; Energy efficiency; Field experiment; Subsidies;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:88:y:2025:i:3:d:10.1007_s10640-024-00942-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.