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Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice

Koichiro Ito (), Takanori Ida and Makoto Tanaka ()

No 28413, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study a problem in which policymakers need to screen self-selected individuals by unobserved heterogeneity in social welfare gains from a policy intervention. In our framework, the marginal treatment effects and marginal treatment responses arise as key statistics to characterize social welfare. We apply this framework to a randomized field experiment on electricity plan choice. Consumers were offered socially efficient dynamic pricing with randomly assigned take-up incentives. We find that price-elastic consumers—who generate larger welfare gains—are more likely to self-select. Our counterfactual simulations quantify the optimal take-up incentives that exploit observed and unobserved heterogeneity in selection and welfare gains.

JEL-codes: L94 Q41 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-exp
Note: EEE IO PE
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Working Paper: Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice (2021) Downloads
Working Paper: Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice (2021) Downloads
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