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

Andreas Gerster (), Manuel Frondel (), Kathrin Kaestner (), Michael Pahle () and Puja Singhal ()
Additional contact information
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

No 2504, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

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.

Keywords: Energy conservation; commitment devices; goal setting; savings premium (search for similar items in EconPapers)
JEL-codes: D12 D91 Q41 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2025-03-20
References: Add references at CitEc
Citations:

Downloads: (external link)
https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_2504.pdf First version, 2025 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jgu:wpaper:2504

Access Statistics for this paper

More papers in Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz Contact information at EDIRC.
Bibliographic data for series maintained by Research Unit IPP ().