Cleaner Nudges? Policy Labels and Investment Decision-making

Citation

Lange I, Moro M & Rahman MM (2018) Cleaner Nudges? Policy Labels and Investment Decision-making. Energy Journal, 39 (6), pp. 27-51. https://www.iaee.org/energyjournal/article/3251; https://doi.org/10.5547/01956574.39.6.ilan

Abstract
Recent evidence suggests that labeling of unconditional cash transfers leads recipients to spend more on the labeled good. In this paper we show that the Winter Fuel Payment, an unconditional cash transfer, has distortionary effects on the market for goods related to the labeled product, renewable technologies. Using a Regression Discontinuity Design this analysis finds a robust reduction in the probability to install renewable energy technologies of 1.2 percentage points. Falsification tests support the labeling hypothesis. As a result, households use too much energy from sources which generate pollution and too little from relatively cleaner technologies.

Keywords
Winter Fuel Payment; Regression Discontinuity; Renewable energy; Causal effect

Journal
Energy Journal: Volume 39, Issue 6

People

Professor Mirko Moro

Professor, Economics