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An Experimental Study on the Gap between Willingness to Pay and Willingness to Donate for Green Electricity

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  • Roland Menges
  • Stefan Traub

Abstract

We experimentally investigate the gap between willingness to pay and willingness to donate in the context of the promotion of green electricity. The experiment involves two differing scenarios (public choice versus individual choice) and two distinct public payment vehicles (direct tax versus indirect tax). Our main result is that subjects´ WTP significantly exceeds WTD, by a factor of three. Regression analysis shows that our results remain robust when controlling for personal characteristics and attitudes. We conclude from our results that our subjects perceived the promotion of environmental quality as a public duty rather than an individual task.

Suggested Citation

  • Roland Menges & Stefan Traub, 2009. "An Experimental Study on the Gap between Willingness to Pay and Willingness to Donate for Green Electricity," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(3), pages 335-357, September.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200909)65:3_335:aesotg_2.0.tx_2-d
    DOI: 10.1628/001522108X477804
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    Citations

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    Cited by:

    1. Alberini, Anna & Ščasný, Milan & Bigano, Andrea, 2018. "Policy- v. individual heterogeneity in the benefits of climate change mitigation: Evidence from a stated-preference survey," Energy Policy, Elsevier, vol. 121(C), pages 565-575.
    2. Mark A. Andor, Manuel Frondel, and Colin Vance, 2017. "Germanys Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    3. Herbes, Carsten & Friege, Christian & Baldo, Davide & Mueller, Kai-Markus, 2015. "Willingness to pay lip service? Applying a neuroscience-based method to WTP for green electricity," Energy Policy, Elsevier, vol. 87(C), pages 562-572.
    4. Herbes, Carsten & Rilling, Benedikt & MacDonald, Scott & Boutin, Nathalie & Bigerna, Simona, 2020. "Are voluntary markets effective in replacing state-led support for the expansion of renewables? – A comparative analysis of voluntary green electricity markets in the UK, Germany, France and Italy," Energy Policy, Elsevier, vol. 141(C).
    5. Czap, Natalia V. & Czap, Hans J. & Khachaturyan, Marianna & Lynne, Gary D. & Burbach, Mark, 2012. "Walking in the shoes of others: Experimental testing of dual-interest and empathy in environmental choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 642-653.
    6. Carsten Herbes & Lorenz Braun & Dennis Rube, 2016. "Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies," Energies, MDPI, vol. 9(4), pages 1-15, March.
    7. Jang-Hwan Jo & Chang-Bae Lee & Hye-Jung Cho & Jukwan Lee, 2021. "Estimation of Citizens’ Willingness to Pay for the Implementation of Payment for Local Forest Ecosystem Services: The Case of Taxes and Donations," Sustainability, MDPI, vol. 13(11), pages 1-14, May.
    8. Christian A. Oberst & Reinhard Madlener, 2015. "Prosumer Preferences Regarding the Adoption of Micro†Generation Technologies: Empirical Evidence for German Homeowners," Working Papers 2015.07, International Network for Economic Research - INFER.
    9. Mark A. Andor & Manuel Frondel & Colin Vance, 2017. "Germany’s Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay," The Energy Journal, , vol. 38(1_suppl), pages 211-228, June.
    10. Andor Mark A. & Frondel Manuel & Vance Colin, 2014. "Hypothetische Zahlungsbereitschaft für grünen Strom: Bekundete Präferenzen privater Haushalte für das Jahr 2013," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(4), pages 355-366, December.
    11. Khachaturyan, Marianna & Czap, Natalia V., 2016. "Different Strokes for Different Folks: Gender and Emotions in an Environmental Game," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 5(4).
    12. Löschel, Andreas & Sturm, Bodo & Uehleke, Reinhard, 2013. "Revealed preferences for climate protection when the purely individual perspective is relaxed: Evidence from a framed field experiment," ZEW Discussion Papers 13-006, ZEW - Leibniz Centre for European Economic Research.
    13. Oberst, Christian & Madlener, Reinhard, 2015. "Prosumer Preferences Regarding the Adoption of Micro‐Generation Technologies: Empirical Evidence for German Homeowners," FCN Working Papers 22/2014, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    14. Löschel, Andreas & Sturm, Bodo & Uehleke, Reinhard, 2017. "Revealed preferences for voluntary climate change mitigation when the purely individual perspective is relaxed – evidence from a framed field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 149-160.

    More about this item

    Keywords

    free-riding; green electricity; impure altruism; willingness to donate; willingness to pay;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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