Micro-targeting consumers to reduce consumptive externalities

Abstract

When correcting for consumption externalities policymakers may employ economic incentives, a uniform moral suasion intervention, or various micro-targeted moral suasion interventions. To assess the relative effectiveness of these policy interventions, we randomly assign consumers to different moral suasion treatments designed to increase their willingness to pay for energy efficient light bulbs. Both economic incentives and single moral suasion interventions have similar modest effects on household willingness to pay for this durable good. However, we find that optimally targeting moral suasion messages increases consumers’ choice of the most efficient light bulbs even more than large subsidies.