AEA RCT Registry

Fields Changed

Registration

Field	Before	After
Trial Title	Information Nudges, Subsidies, and Welfare: Evidence from a Natural Field Experiment	Information Nudges, Subsidies, and Crowding Out of Attention: Field Evidence from Energy Efficiency Investments
Abstract	A small body of the recent literature in economics analyzes how the negative welfare eﬀects of behavioral biases can be countered by taxes. While there is an ongoing debate about whether governments should address behavioral biases by taxes or nudges (e.g. sugar taxes vs. food labels), little is known about how these policy tools perform relative to each other. One challenge for such a comparison is the limited evidence of how nudges affect choices and welfare. We intent to contribute to this question by analyzing the welfare effects of information nudges. A particular feature about most of the information nudges employed in the real world is that they only coarsely inform consumers about the relevant topic. We model information nudges as noisy signals that coarsely inform consumers about the uninternalized consequences of a choice. Our model provides sufficient statistics to analyze the welfare effect of a coarse nudge in comparison to a more specific nudge and an internality tax. The theoretical model guides our design of a large-scale natural ﬁeld experiment in which we look at the case where the internality distortions are caused by biased beliefs about the beneﬁts of energy efﬁciency. We construct two nudges that diﬀer in their degree of coarseness and compare its eﬀect on consumer behavior. By combining these treatments with exogenous price variation for different lighting technologies, we are able to quantify the welfare eﬀects of nudges with diﬀerent levels of coarseness and compare it to a subsidy on energy-eﬃcient light bulbs. Our experimental design further incorporates a novel approach to control for bias heterogeneity post-treatment in a between-subject design. This approach circumvents the need for within-subject designs increasingly used in behavioral welfare economics.	How can information substitute or complement financial incentives such as Pigouvian subsidies? We answer this question in a large-scale field experiment that cross-randomizes energy efficiency subsidies with information about the financial savings of LED lighting. Information has two effects: It shifts and rotates demand curves. The direction of the shift is ambiguous and highly dependent on the information design. Informing consumers that an LED saves 90% in annual energy costs increases LED demand, but showing them that 90% corresponds to an average of 11 euros raises demand for less efficient technologies. The rotation of the demand curve is unambiguous: information dramatically reduces both own-price and cross-price elasticities, which makes subsidies less effective. The uniform decrease in price elasticities suggests that consumers pay less attention to subsidies when information is provided. We structurally estimate that welfare-maximizing subsidies can be 200% larger than the Pigouvian benchmark when combined with information.
Last Published	March 07, 2022 11:27 AM	June 21, 2024 06:05 AM
Primary Outcomes (End Points)	The number of LED, CFL, halogen and incandescent light bulbs purchased. The average energy efficiency level (wattage) of the products purchased. The price elasticity for all four light bulb technologies (incandescent, halogen, CFL, LED). We also estimate whether our interventions affected the extensive margin, i.e. the probability of purchasing a light bulb.	The number of LED, CFL, halogen and incandescent light bulbs purchased. The price elasticity for all four light bulb technologies (incandescent, halogen, CFL, LED). We also estimate whether our interventions affected the extensive margin, i.e. the probability of purchasing a light bulb.
Planned Number of Observations	Around 1.4 million observations.	600,000 website visitors
Sample size (or number of clusters) by treatment arms	Around 93,333 individuals per treatment.	40,000 website visitors per treatment.