Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice / Koichiro Ito, Takanori Ida, Makoto Tanaka.

Format:

Book

Author/Creator:

Ito, Koichiro.

Contributor:

National Bureau of Economic Research.

Ida, Takanori.

Tanaka, Makoto.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28413.

NBER working paper series no. w28413

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

We study a problem in which policymakers need to screen self-selected individuals by unobserved heterogeneity in social welfare gains from a policy intervention. In our framework, the marginal treatment effects and marginal treatment responses arise as key statistics to characterize social welfare. We apply this framework to a randomized field experiment on electricity plan choice. Consumers were offered welfare-improving dynamic pricing with randomly assigned take-up incentives. We find that price-elastic consumers--who generate larger welfare gains--are more likely to self-select. Our counterfactual simulations quantify the optimal take-up incentives that exploit observed and unobserved heterogeneity in selection and welfare gains.

Notes:

Print version record

January 2021.