Papers

    Published Articles

Abstract: Intensive marketing campaigns can be used to increase awareness, consideration, purchase, and word of mouth (WOM) of prosocial products. With expanded interest and belief in how social norms and spillovers might be leveraged to combat climate change, it is critical to understand how campaigns designed to leverage such peer effects can be best designed. In this paper, we study the role of campaign duration in solar photovoltaic adoption using a large-scale field experiment in which we randomly assign communities to campaigns with shorter durations, increasing the marketing intensity to maintain the same total resources per campaign. We find that the longer campaigns generate more WOM and lead to more adoption postcampaign despite a comparable number of installations during the campaigns. The shorter campaigns led to 22.6 fewer installations per town in the two years after the campaigns concluded, leading to a cost per acquisition of $4,367 versus $2,029 in the longer campaigns, the latter being lower than installers’ self-reported acquisition costs and the former being substantially higher.


Abstract: An in-home display (IHD) is an important add-on to a smart electric meter that provides continuous real-time feedback to households about their energy usage and costs. Utilising experimental variation in an online survey, I estimate a price elasticity of demand for IHD of −0.15, conditional on smart meter adoption. Households who did not pay for their smart meter device are also more sensitive to the IHD price, suggesting potential negative spillovers from smart meter subsidies.


Abstract: This paper utilizes an experiment embedded within a hypothetical survey to a nationally representative sample of US households to quantify the extent to which monetary installation costs (in the form of a monthly electric bill surcharge) can present a barrier to the residential adoption of smart meters. The results suggest that a $2.50/month surcharge would decrease the average probability of smart meter adoption by 18 percentage points. This estimate is robust to a variety of alternative empirical specifications and sample restrictions. There is considerable heterogeneity in the estimated effect based on household electricity consumption, familiarity with smart meter technology, and perceived accuracy of traditional meters. These findings have important implications for electricity providers and policymakers, as they suggest that eliminating installation charges would be justified from a benefit-cost perspective and point to potential gains from redesigning smart meter policy to account for household heterogeneity.


Abstract: On May 7, 2021, the Colonial Pipeline system was shut down for 6 days in response to a cyberattack. Using daily regular gasoline price data at the city level and employing a difference-in-differences approach to address potential demand-side confounding factors, we find that the shutdown led to a 4 cents-per-gallon increase in average gasoline prices in affected areas, with the estimated impact varying across locations based on their access to alternative means of fuel supply. Although the overall effect was initially slow, it persisted even after the reopening of the pipeline.


Abstract:  This paper extends the literature on products liability by considering the implications of temptation in a context where consumers have different susceptibilities to risk. In response to consumer heterogeneity, producers can offer multiple product varieties that vary according to their riskiness and price. However, when consumers exhibit price-based temptation, the price differential can tempt some consumers to purchase a less safe product variety even when that purchase decision might not be the rational choice given their specific risks. In resisting this temptation, they incur self-control costs. The role of temptation has been studied in other contexts, but its implications for the design of product liability rules have not previously been explored. We show that there is a trade-off between the desirability of sorting due to consumer heterogeneity and the allocative impacts from temptation. No liability leads to excessive risk taking by consumers (due to temptation), while full liability leads to excessive caution by consumers (because of the inability to sort). Thus, full liability is welfare-maximizing if temptation is sufficiently strong, but when temptation is low, increasing liability will have the opposite effect, leading to more purchases of the unsafe product and hence a decrease in overall safety and social welfare.


Abstract:  In this work, we enrich the technical details of the energy sector by extending the conventional framework of computable general equilibrium (CGE) modeling, and we take into account uncertainty regarding fossil-fueled technologies and endogenous nonfossil energy technological change, which provides us with formidable benefits to explore the policy synergy of China's multiple energy development and carbon control targets. We find that carbon pricing policy plays a consistently negative role in economic growth, while the economic impacts of nonfossil investment incentives differ in their policy stringency. Compared to energy intensity reduction goals that could be easily attained given the baseline effort, achieving carbon peaking targets may be relatively difficult without additional policy intervention, and the policy efforts required to reach energy consumption control targets in 2030 and nonfossil energy development targets in 2050 are even stricter. This research also identifies significant policy effect differences in carbon pricing and nonfossil investment incentives.


Abstract:  This study employs a difference-in-differences framework to assess the effectiveness of the 2008-2012 pilot phase of the Kansas Water Right Transition Assistance Program at reducing either groundwater or surface water use. We distinguish between two program components: creek sub-basins and High Priority Areas. Results demonstrate that water right retirement in High Priority Areas substantially reduced groundwater use. Regardless of the program component, we find no effect on surface water use. Our conclusions are robust to various specifications. This study is the first to directly estimate the effect of water right retirement or any form of restriction on irrigation-related water rights.


Abstract:  We analyze the impact of restricting outdoor irrigation using monthly data from 408 urban water suppliers in California during the final years of the 2012–2017 drought. Our estimates suggest that assigning an additional no-irrigation day per week leads to a decrease in average monthly residential water consumption by approximately 0.8 gallons per capita-day. There is substantial heterogeneity in this impact. First, the marginal effect of a stricter irrigation policy varies depending on the existing level of outdoor watering restrictions — while initial restrictions lead to considerable conservation gains, tightening these measures further does not bring additional gains unless 6 weekly no-irrigation days are implemented. Furthermore, the policy is more effective in areas where residential water use represents a larger share of total urban water consumption and areas which perform better at reaching the 25% state conservation target.


Abstract:  Although meant to encourage investment in solar photovoltaic (PV) systems, some incentive policies may themselves become a barrier in instances where policy-related uncertainty is present, as potential solar adopters delay their investment until uncertainty is resolved. This study utilizes a quasi-experimental setting to quantify the effect of solar policy uncertainty. Focusing on the California Solar Initiative's residential rebate program, I exploit the temporary exhaustion of funds within one of the utility territories as an exogenous source of increased uncertainty and estimate that it leads to a 67% drop in rebate applications in an average ZIP code-week. There is considerable heterogeneity in this effect depending on household income and PV system size. Among households that are least likely to invest in PV without a rebate incentive, program participation drops by up to 69%. This suggests potentially significant loss in program effectiveness due to lower PV adoption and underscores the importance of accounting for uncertainty in policy evaluations.


Abstract:  This paper estimates demand for residential solar photovoltaic (PV) systems using a new approach to address three empirical challenges that often arise with count data: excess zeros, unobserved heterogeneity, and endogeneity of price. Our results imply a price elasticity of demand for solar PV systems of -0.65. Counterfactual policy simulations indicate that reducing state financial incentives in half would have led to 9% fewer new installations in Connecticut in 2014. Calculations suggest a subsidy program cost of $364/tCO2 assuming solar displaces natural gas. Our Poisson hurdle approach holds promise for modeling the demand for many new technologies.


Abstract:  By using stochastic Lotka-Volterra model, we make a cross-country analysis to potential interactions between penetrations of wind and photovoltaic (PV) technology within uncertain technology ecological systems, and explore the possible distributions of stochastic technology proliferation orbits. We find both positive and negative scale effects for wind markets, while PV solar markets are consistently scale-restrictive for all the target countries; the current technology interactions are dominated by mutualism and prey-predator types, of which prey-predator relationships mainly exist in the US, China and Italy, with PV solar to be predators. Most importantly, we find significant relationships between stochastic technology diffusion orbits and deterministic technology equilibrium orbit; specifically, random orbits of cumulative installed capacity for both wind and PV solar oscillate around the equilibrium orbit under the deterministic Lotka-Volterra model, normally distributed, and the mean orbit of such large-scale random orbits converges to the analytic equilibrium orbit. This finding makes great sense to identify countries with stable technology diffusion distributions, and contributes to exploit predictive features of stochastic Lotka-Volterra model. On this basis, we recognize 3 countries with normally distributed random orbits of technology penetration, i.e., India, Japan and Italy, and three-year forecasts to 2020 are provided for both wind and PV solar technology.


Abstract:  This paper uses a randomized field experiment to test how information provision leveraging social norms, salience, and a personal touch can serve as a nudge to influence the uptake of residential energy audits. Our results show that a low-cost carefully-crafted notecard can increase the probability of a household to follow through with an already scheduled audit by 1.1 percentage points on a given day. The effect is very similar across individuals with different political views, but households in rural areas display a substantially greater effect than those in urban areas. Our findings have important managerial and policy implications, as they suggest a cost-effective nudge for increasing energy audit uptake and voluntary energy efficiency adoption.


Abstract:  The assumption of a fixed amount of land remaining in agriculture regardless of changing climate conditions – one of the features of the “dumb farmer scenario” – is likely to bias the estimated social welfare impacts of climate change. In order to quantify this bias, we employ a demand-supply framework to determine both the amount of land allocated to agricultural and non-agricultural uses as well as the social welfare associated with this allocation choice when no market distortions exist. We present an application of our model to the Southeastern United States and simulate the effects of changing climate conditions on land allocation in the region between 2007 and 2040. We find a very modest welfare bias when maintaining current farmland preservation policies and a more substantial bias if we assume that additional land policies are instituted which have spillover welfare effects in other land-using sectors.


Abstract:  Existing studies point out various factors that might contribute to an "energy efficiency gap," but do not consider the potential effect of choice sets on behavior. In an earlier paper, we developed a theoretical model of the purchase of energy-using durables in which the choice set matters if consumers face price-driven temptation and self-control costs. In this paper, we use refrigerator market data to illustrate that, under such a preference structure, energy efficiency standards can have larger overall welfare benefits than previously recognized, suggesting the importance of considering choice sets in welfare analyses of standards.


Abstract:  The economic models that prescribe Pigovian taxation as the first-best means of reducing energy-related externalities are typically based on the neoclassical model of rational consumer choice.  Yet, consumer behavior in markets for energy-using durables is generally thought to be far from efficient, giving rise to the concept of the "energy-efficiency gap."  This paper presents a welfare analysis of energy policies that is based on a behavioral model of temptation and self-control, introduced by Gul and Pesendorfer (2001, 2004).  We find that, in the presence of temptation, (i) Pigovian taxes alone do not yield a first-best outcome, (ii) when viewed as substitutes, energy efficiency standards can dominate Pigovian taxes, and (iii) a policy combining standards with a Pigovian tax can yield higher social welfare than a Pigovian tax alone, implying that the two instruments should be viewed as complements rather than substitutes. 

 

Abstract:  The magnitude and frequency of coastal storms are expected to increase with rising global sea levels, which necessitates evaluating coastal flood adaptation measures.  This study examines an important issue in the context of coastal flood protection, namely, the decision when to adopt protection measures.  For any given coastal region, our benefit-cost framework allows us to determine the optimal timing of initiating protection that maximizes expected net benefits.  We present an application of this framework to a coastal area in Connecticut.  Our results suggest that the optimal timing of adopting protection may vary across different census blocks within the study area.  We find that using a relatively low discount rate in the benefit-cost analysis implies greater heterogeneity in the timing decisions and earlier overall adoption, whereas, with higher discount rates, the timing decisions are reduced to a choice between early protection and no protection at all.  If possible negative environmental and aesthetic impacts of sea barriers are taken into account, delaying protection would become more desirable, with the extent of delay being sensitive to the relative magnitude of one-time costs (e.g., loss of ocean view and recreational opportunities) vs. continuous costs (e.g., shoreline erosion and loss of wetlands). 

  

 

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