Dynamic Targeting: Experimental Evidence from Energy Rebate Programs

Takanori Ida, Takunori Ishihara, Koichiro Ito, Daido Kido, Toru Kitagawa, Shosei Sakaguchi and Shusaku Sasaki

No 32561, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Economic policies often involve dynamic interventions, in which individuals receive repeated treatments over multiple periods. However, existing economic studies typically focus on static targeting, potentially overlooking valuable information generated by dynamic interventions. We develop a framework for designing optimal dynamic targeting policies that maximize social welfare. We show that dynamic targeting can outperform static targeting through several key mechanisms—learning, habit formation, and adaptive targeting effects—and develop a method to empirically identify these effects. Using a sequential randomized controlled trial (RCT) of a residential energy rebate program, we find that dynamic targeting nearly doubles the social welfare gains relative to static targeting and produces more than five times larger welfare gains than non-targeting policies. We also investigate how households’ anticipatory responses to adaptive assignment rules affect the welfare gains from dynamic targeting.

JEL-codes: C1 C50 C9 C93 Q4 Q40 Q41 Q48 Q50 Q58 (search for similar items in EconPapers)
Date: 2024-06
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