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

See all articles by Claus Ghesla

Claus Ghesla

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS)

Manuel Grieder

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS); Zurich University of Applied Sciences (ZHAW)

Renate Schubert

ETH Zürich - Center for Economic Research

Date Written: November 7, 2019

Abstract

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

Suggested Citation

Ghesla, Claus and Grieder, Manuel and Schubert, Renate, Nudging the Poor and the Rich - A Field Study on the Distributional Effects of Green Electricity Defaults (November 7, 2019). Energy Economics, Vol. 86, 2020. Available at SSRN: https://ssrn.com/abstract=3147028 or http://dx.doi.org/10.2139/ssrn.3147028

Claus Ghesla (Contact Author)

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS) ( email )

Haldeneggsteig 4
Zurich, Zurich 8006
Switzerland

Manuel Grieder

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS) ( email )

Chair of Economics
Clausiusstrasse 87
Zurich, 8093
Switzerland

Zurich University of Applied Sciences (ZHAW)

Center for Energy and the Environment
School of Management and Law
Winterthur, CH 8401
Switzerland

Renate Schubert

ETH Zürich - Center for Economic Research ( email )

Weinbergstr. 35
Zurich 8092
Switzerland

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