Policy Research

Evaluating Behaviorally-Motivated Policy: Experimental Evidence from the Lightbulb Market

Hunt Allcott, Dmitry Taubinsky

Summary

The authors use two randomized experiments to judge the value of subsidies for the purchase of high efficiency lightbulbs. They found that the most optimal way to increase consumer welfare was through moderate subsides for CFL lightbulbs rather than a ban on incandescent bulbs.

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Policy Implications

In order to encourage energy efficiency in the public it is important for the average consumer to feel better off when engaging in energy efficient behavior, this includes the purchase of more energy efficient products. This study shows that the best way to do that may be to subsidies the consumers purchases of such products, rather than ban the purchase of less efficient products.