Nudging the Poor and the Rich - A Field Study on the Distributional Effects of Green Electricity Defaults
50 Pages Posted: 24 Mar 2018 Last revised: 27 Feb 2020
Date Written: November 7, 2019
Choice defaults are an increasingly popular public policy tool. Yet there is little knowledge of the distributional consequences of such nudges for different groups in society. We report results from an elicitation study in the residential electricity market in Switzerland in which we contrast consumers’ actual contract choices under an existing default regime with the same consumers' active choices in a survey presenting the same choice-set without any default. We find that the default is successful at curbing greenhouse gas emissions, but it leads poorer households to pay more for their electricity consumption than they would want to, while leaving a significant willingness to pay for green electricity by richer households untapped.
Keywords: choice defaults, welfare, green electricity, public policy, nudging, distributional effects
JEL Classification: D12, D31, D61, D63, H23, M38, Q48
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