Nudging the Poor: Field Experimental Evidence on Increasing Energy Efficiency Investments among Low-Income Households – Martin Kesternich

Speaker

Prof. Dr. Martin Kesternich (Universität Paderborn)

Abstract

Managing the burden of high energy prices on low-income households is a major concern among policy-makers. However, publicly funded assistance programs to increase energy efficiency levels often suffer from low take-up rates. While nudges may be a suitable tool to achieve higher take-up at little cost, there exists little systematic evidence on their effectiveness when applied at the intersection of poverty and energy efficiency. This paper utilizes a natural field experiment conducted with the largest energy efficiency assistance program in Germany to study whether and to what extent low-cost nudges are able to increase take-up of an energy efficiency subsidy for low-income households. Our results show that in such a setting, a gain framing is highly successful and significantly outperforms a loss framing. Enhancements of the gain framing designed to address multiple barriers do not significantly improve subsidy take-up. These results highlight the importance of better understanding the decision-making of low-income households, and the resulting implications for program design. 

Room

Lecture Hall (A-032)