Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice

Koichiro Ito, Takanori Ida and Makoto Tanaka

American Economic Review, 2023, vol. 113, issue 11, 2937-73

Abstract: We study a problem in which policymakers need to screen self-selected individuals by unobserved heterogeneity in social welfare gains from a policy intervention. In our framework, the marginal treatment effects and marginal treatment responses arise as key statistics to characterize social welfare. We apply this framework to a randomized field experiment on electricity plan choice. Consumers were offered welfare-improving 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.

JEL-codes: C93 D12 L11 L94 L98 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Related works:
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)
Working Paper: Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice (2021)
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DOI: 10.1257/aer.20210150

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