The behavioural effect of Pigovian regulation: Evidence from a field experiment

Bruno Lanz, Jules Wurlod, Luca Panzone and Timothy Swanson

No 32-2014, CIES Research Paper series from Centre for International Environmental Studies, The Graduate Institute

Abstract: Monetary incentives associated with Pigovian regulation may crowd-out intrinsic motivation to mitigate an externality. We quantify this behavioral effect using data from an experiment with real product choices together with a structural model of consumer behavior. First we show that information about products' embodied carbon induces a voluntary shift to cleaner products, and we estimate that intrinsic motivation is equivalent to a change in relative prices of GBP25-167/tCO2. Second, the impact of a Pigovian intervention in proportion to embodied carbon (GBP19/tCO2) suggests significant motivation crowding, and compensating this behavioral bias would require increasing the Pigovian price signal by GBP0.60-170/tCO2. Finally, based on a cross-product comparison, we find that motivation crowding declines with the cost (or effort) of provision. This suggests that, on account of motivation crowding, environmental taxes ought to be set higher for products with price elastic demand.

Keywords: Motivation crowding; Pigovian regulation; Information; Behavioral agents; Field experiments; Policy instruments. (search for similar items in EconPapers)
JEL-codes: C91 D03 D12 L15 L50 Q58 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-08-20
New Economics Papers: this item is included in nep-ene, nep-env, nep-exp and nep-res
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Related works:
Journal Article: The behavioral effect of Pigovian regulation: Evidence from a field experiment (2018)
Working Paper: The Behavioral Effect of Pigovian Regulation: Evidence from a Field Experiment (2017)
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