Consumer Choice and the Energy Paradox
Joint with Sendhil Mullainathan, Todd Rogers, and Eldar Shafir
Financial support from the Sloan Foundation
This project combines insights from economics and psychology to advance our understanding of how consumers make energy-related choices and the policy implications of these choice processes. Funding from the Sloan Foundation has supported a set of projects, including randomized field experiments with two large retailers, lab experiments, policy analysis via applied theory, and a large consumer survey called the Vehicle Ownership and Alternatives Survey (VOAS). The VOAS also received significant financial support from the National Science Foundation through a grant to Time Sharing Experiments for the Social Sciences.
Why Are Americans Not More Energy Efficient?
Evidence from a Large Randomized Field Experiment
Joint with Michael Greenstone
Project manager: KVS Vinay
Financial support from the MacArthur Foundation
Many analysts and policymakers believe that energy efficiency is a “win-win” approach to combating climate change: by reducing energy use, consumers and firms can simultaneously save money and reduce carbon emissions. A central theme of this argument is that home energy efficiency investments may have high social returns, by reducing energy use externalities, and perhaps high private returns, due to other market failures that cause underinvestment in energy efficient capital stock. Funding from the MacArthur Foundation is making possible a large-scale randomized field experiment that can provide rigorous evidence on several of the key questions in this area:
- .Why do so few homeowners take up seemingly-high return investments in insulation and other energy efficiency measures?
- .What are the causal effects of these investments on energy use?
- .What is the resulting welfare cost per ton of carbon dioxide abated?