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

Hunt Allcott and Judd B. Kessler

No 21671, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: “Nudge”-style interventions are often deemed “successful” if they cause large behavior change, 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 welfare gains by a factor of 3.7. Overall, the welfare gains from home energy reports might be overstated by $620 million. We develop a prediction algorithm for optimal targeting; this would double the welfare gains.

JEL-codes: C44 C53 D12 L94 Q41 Q48 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-cbe, nep-ene and nep-exp
Note: EEE PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

Published as Hunt Allcott & Judd B. Kessler, 2019. "The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons," American Economic Journal: Applied Economics, vol 11(1), pages 236-276.

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