Do behavioral nudges interact with prevailing economic incentives? Pairing experimental and quasi-experimental evidence from water consumption.
University of Chicago
Friday, January 17, 2020
Taylor-Hibbard Seminar Room (Rm103)
12:00 pm-1:30 pm
Social comparisons are a popular behavioral nudge to change behavior, partially because raising prices can be politically difficult. In many settings, nudges may interact with prevailing prices, potentially crowding out intrinsic motivation to conserve or by increasing the salience of prices. We investigate the interaction of prices and nudges for water conservation in two experiments in neighboring utilities. First, we layer randomized behavioral treatments on top of variation in price driven by arbitrary lot-size thresholds that assign marginal prices to customers exogenously. Second, we explore whether behavioral treatments affect consumers’ price sensitivity. We find no consistent evidence that social comparisons are more effective at inducing conservation at higher prices or that they increase consumers’ price sensitivity. Ultimately, we find little empirical support that consumers respond to behavioral treatments due to private economic benefits.