Cleaner Nudges? Policy Labels and Investment Decision-making

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 t...

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Bibliographic Details
Published in:	The Energy journal (Cambridge, Mass.) Vol. 39; no. 6; pp. 27 - 52
Main Authors:	Lange, Ian, Moro, Mirko, Rahman, Mohammad Mahbubur
Format:	Journal Article
Language:	English
Published:	Los Angeles, CA International Association for Energy Economics 01-11-2018 SAGE Publications Sage Publications Ltd. (UK)
Subjects:	Alternative energy sources Analysis Backup software Behavior Clean technology Decision making Economic policy Energy conservation Energy efficiency Energy technology Expenditures Households Labeling Labels Pollution Pollution sources Renewable energy Renewable energy technologies Renewable resources Residential energy Robustness (mathematics) Statistical analysis Technology United Kingdom Causal effect Winter Fuel Payment Regression Discontinuity Renewable energy
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Summary:	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.
ISSN:	0195-6574 1944-9089
DOI:	10.5547/01956574.39.6.ilan