The Lightbulb Paradox: Evidence from Two Randomized Experiments

Hunt Allcott and Dmitry Taubinsky

No 19713, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Imperfect information and inattention to energy costs are important potential justifications for energy efficiency standards and subsidies. We evaluate these policies in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. In the context of the model, the main results suggest that moderate subsidies for energy efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs.

JEL-codes: D03 D12 H21 H31 L94 Q41 Q48 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-ene
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Published as Evaluating Behaviorally Motivated Policy: Experimental Evidence from the Lightbulb Market Hunt Allcott Dmitry Taubinsky AMERICAN ECONOMIC REVIEW VOL. 105, NO. 8, AUGUST 2015 (pp. 2501-38)

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