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Moral Suasion and Economic Incentives: Field Experimental Evidence from Energy Demand†

Moral Suasion and Economic Incentives: Field Experimental Evidence from Energy Demand† AbstractFirms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for economic activities. To investigate persistence of such interventions, we randomly assign households to moral suasion and dynamic pricing that stimulate energy conservation during peak-demand hours. We find significant habituation and dishabituation for moral suasion—the treatment effect diminishes after repeated interventions but can be restored to the original level by a sufficient time interval between interventions. Economic incentives induce larger treatment effects, little habituation, and significant habit formation. Our results suggest moral suasion and economic incentives produce substantially different short-run and long-run policy impacts. (JEL C93, D83, L94, L98, Q41, Q48) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Moral Suasion and Economic Incentives: Field Experimental Evidence from Energy Demand†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7731
DOI
10.1257/pol.20160093
Publisher site
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Abstract

AbstractFirms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for economic activities. To investigate persistence of such interventions, we randomly assign households to moral suasion and dynamic pricing that stimulate energy conservation during peak-demand hours. We find significant habituation and dishabituation for moral suasion—the treatment effect diminishes after repeated interventions but can be restored to the original level by a sufficient time interval between interventions. Economic incentives induce larger treatment effects, little habituation, and significant habit formation. Our results suggest moral suasion and economic incentives produce substantially different short-run and long-run policy impacts. (JEL C93, D83, L94, L98, Q41, Q48)

Journal

American Economic Journal: Economic Policy – American Economic Association

Published: Feb 1, 2018

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