The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons

Hunt Allcott and Judd B. Kessler

American Economic Journal: Applied Economics, 2019, vol. 11, issue 1, 236-76

Abstract: "Nudge"-style interventions are often deemed successful if they generate large behavior change at low cost, but they are rarely subjected to full social welfare evaluations. We combine a field experiment with a simple theoretical framework to evaluate the welfare effects of one especially policy-relevant intervention, home energy social comparison reports. In our sample, the reports increase social welfare, although traditional evaluation approaches overstate gains because they ignore significant costs incurred by nudge recipients. Overall, home energy report welfare gains might be overstated by $620 million. We develop a prediction algorithm for optimal targeting; this approach would double the welfare gains.

JEL-codes: C93 D91 L95 Q41 Q48 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/app.20170328
References: Add references at CitEc
Citations: View citations in EconPapers (163)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/app.20170328 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... 3WjtocJnWb3YHiL-Gh_w (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... bxZWwHvI9zs5dVtpec1M (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... ZhFzvNt8gfwnjo0QV4pF (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

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:aea:aejapp:v:11:y:2019:i:1:p:236-76

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Applied Economics is currently edited by Alexandre Mas

More articles in American Economic Journal: Applied Economics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().