The Welfare Effects of Behavioral Energy Conservation Programs

The success of interventions aiming to encourage pro-social behavior is often measured by how the interventions affect behavior rather than how they affect welfare. We propose a natural field experiment to measure the welfare effects of one especially policy-relevant intervention, home energy conservation reports. Consumer surplus can be measured by sending consumers introductory reports and offering them the chance to continue the program at a randomly assigned price. The experimental design also allows us to estimate negative willingness-to-pay and address non-response bias. This experiment would help make the important point that the welfare effects of non-price “nudge” interventions can be measured, and policy makers should strongly consider the welfare effects of such interventions, not just their effects on behavior.