Choosing Who Chooses: Selection-driven targeting in energy rebate programs

Takanori Ida, Takunori Ishihara, Koichiro Ito, Daido Kido, Toru Kitagawa, Shosei Sakaguchi and Shusaku Sasaki

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

Abstract: We develop an optimal policy assignment rule that integrates two distinctive approaches commonly used in economics—targeting by observable characteristics and targeting through self-selection . Our method uses experimental or quasi-experimental data to identify who should be treated, untreated, and who should self- select to achieve a policymaker’s objective. Applying this method to a randomized controlled trial on a residential energy rebate program, we find that targeting that leverages both observable data and self- selection outperforms conventional targeting for a standard utilitarian welfare function and welfare functions that balance the equity-efficiency trade-off. We highlight that the LATE framework (Imbens and Angrist, 1994) can be used to investigate the mechanism behind our approach. By introducing new estimators called the LATEs for takers and non-takers , we show that our method allows policymakers to identify whose self-selection would be valuable and harmful to social welfare.

Pages: 49 pages
Date: 2023-02
New Economics Papers: this item is included in nep-ene, nep-exp and nep-upt
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https://www.rieti.go.jp/jp/publications/dp/23e011.pdf (application/pdf)

Related works:
Working Paper: Choosing Who Chooses: Selection-Driven Targeting in Energy Rebate Programs (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:23011

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