Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use
American Economic Review
vol. 104,
no. 4, April 2014
(pp. 1417-38)
Abstract
Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, lowcost information. We use a randomized control trial to test the effect of high-frequency information about residential electricity usage on the price elasticity of demand. Informed households are three standard deviations more responsive to temporary price increases, an effect that is not attributable to price salience. Conservation extends beyond pricing events in the short and medium run, providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement. Survey evidence suggests that information facilitates learning.Citation
Jessoe, Katrina, and David Rapson. 2014. "Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use." American Economic Review, 104 (4): 1417-38. DOI: 10.1257/aer.104.4.1417Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D83 Search; Learning; Information and Knowledge; Communication; Belief
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L94 Electric Utilities
- Q41 Energy: Demand and Supply; Prices
- Q54 Climate; Natural Disasters; Global Warming