The Lightbulb Paradox: Evidence from Two Randomized Experiments

77 Pages Posted: 10 Dec 2013 Last revised: 14 May 2021

See all articles by Hunt Allcott

Hunt Allcott

New York University (NYU)

Dmitry Taubinsky

Harvard University

Date Written: December 2013

Abstract

Imperfect information and inattention to energy costs are important potential justifications for energy efficiency standards and subsidies. We evaluate these policies in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. In the context of the model, the main results suggest that moderate subsidies for energy efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs.

Suggested Citation

Allcott, Hunt and Taubinsky, Dmitry, The Lightbulb Paradox: Evidence from Two Randomized Experiments (December 2013). NBER Working Paper No. w19713, Available at SSRN: https://ssrn.com/abstract=2366047

Hunt Allcott (Contact Author)

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Dmitry Taubinsky

Harvard University ( email )

Cambridge, MA
United States

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