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The Economic Value of Habits in Household Production – A Field Experiment

Ioana Bejan (), Carsten Jensen (), Laura M. Andersen () and Lars Hansen ()
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Ioana Bejan: Department of Food and Resource Economics, University of Copenhagen
Laura M. Andersen: Department of Food and Resource Economics, University of Copenhagen

No 2018/01, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics

Abstract: People are prone to habits but how important are they for economic outcomes? In a randomized field experiment we compare two treatments with identical economic incentives to adjust a range of household production activities. Treatments only differ in the extent to which they allow households to adjust habits relevant for these activities. We utilize smart-metered hourly power consumption to unobtrusively measure treatment effects. We find that preventing habits from being adjusted reduces consumer surplus by 76% suggesting a substantial economic value of habits.

Keywords: habits; field experiment; household behavior; text messages; electricity use (search for similar items in EconPapers)
JEL-codes: C93 D12 D90 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2018-01
New Economics Papers: this item is included in nep-exp and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:foi:wpaper:2018_01

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