IDEAS home Printed from https://ideas.repec.org/p/jgu/wpaper/2504.html
   My bibliography  Save this paper

Premium Programs for Energy Conservation: Evidence from a Randomized Controlled Experiment

Author

Listed:
  • Andreas Gerster

    (Johannes-Gutenberg University, Germany)

  • Manuel Frondel

    (RWI – Leibniz-Institut für Wirtschaftsforschung, Germany)

  • Kathrin Kaestner

    (RWI – Leibniz-Institut für Wirtschaftsforschung, Germany)

  • Michael Pahle

    (Potsdam Institute for Climate Impact Research, Germany)

  • Puja Singhal

    (Potsdam Institute for Climate Impact Research, Germany)

Abstract

Premium programs are seen as a politically attractive substitute for Pigouvian taxes to establish incentives for energy conservation, particularly when energy prices are high. Using an incentive-compatible survey experiment with almost 4,500 participants, this paper analyzes consumers’ uptake of a savings premium paid when a household reaches a pre-defined energy conservation target. We find that the financial benefit of a savings premium motivates only 11 percent of households to opt for it. 42 percent of households never take part, irrespective of generous premium payments of up to 1,500 euros. The remaining households prefer the conditional payment under the premium program to an equally large unconditional amount, which indicates that they use the premium program as a commitment device. Our findings challenge the view that premium programs and taxes are equivalent resource conservation policies. In particular, they imply that generous premium programs will be largely ineffective.

Suggested Citation

  • Andreas Gerster & Manuel Frondel & Kathrin Kaestner & Michael Pahle & Puja Singhal, 2025. "Premium Programs for Energy Conservation: Evidence from a Randomized Controlled Experiment," Working Papers 2504, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    • Handle: RePEc:jgu:wpaper:2504
    as

    Download full text from publisher

    File URL: https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_2504.pdf
    File Function: First version, 2025
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Energy conservation; commitment devices; goal setting; savings premium;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

    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:jgu:wpaper:2504. 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: Research Unit IPP (email available below). General contact details of provider: https://edirc.repec.org/data/vlmaide.html .

    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.