Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice

Koichiro Ito, Takanori Ida and Makoto Tanaka

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We study a problem in which policymakers need to screen self-selected individuals based on their unobserved heterogeneity in the social welfare gains resulting from a policy intervention. In our framework, the marginal treatment effects and marginal treatment responses arise as key statistics that allow for the characterization of social welfare. We apply this framework to a randomized field experiment on electricity plan choice. Consumers were offered socially efficient dynamic pricing with randomly assigned take-up incentives. We find that price-elastic consumers—who generate larger welfare gains—are more likely to self-select. Our counterfactual simulations quantify the optimal take-up incentives that exploit observed and unobserved heterogeneity in selection and welfare gains.

Pages: 48 pages
Date: 2021-02
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (8)

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https://www.rieti.go.jp/jp/publications/dp/21e008.pdf (application/pdf)

Related works:
Journal Article: Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice (2023)
Working Paper: Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice (2021)
Working Paper: Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:21008

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