Crowding-in, crowding-out and over-crowding: The interaction between price and quantity based instruments and intrinsic motivation

Grischa Perino, Luca Panzone and Timothy Swanson

No 11-10, Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) from School of Economics, University of East Anglia, Norwich, UK.

Abstract: We conduct a field experiment involving real purchasing decisions in a large supermarket chain to test the effect of different regulatory interventions aiming to induce a more climate-friendly diet on intrinsic motivation. Focusing on shoppers who prefer the dirty variety, we compare labeling, a subsidy, a product ban and neutrally framed versions of the latter two in their ability to induce shoppers to switch to cleaner varieties. Carbon footprint labels and bans activate intrinsic motivation of shoppers (crowding-in). Remarkably, a subsidy framed as an explicit intervention is less effective than both a label and an equivalent but neutrally framed price change. The effects of information and changes in relative prices are not only not additive (crowding-out) but combined perform worse than each individually (over-crowding). We therefore find markedly different effects of price and quantity based instruments on intrinsic motivation.

Keywords: Motivation crowding; prices vs quantities; climate policy; diet choices; field experiment (search for similar items in EconPapers)
JEL-codes: C93 H23 H41 Q18 Q54 Q58 (search for similar items in EconPapers)
Date: 2011-03-01
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Citations: View citations in EconPapers (2)

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