Default Effects And Follow-On Behaviour: Evidence From An Electricity Pricing Program

• Meredith Fowlie ^[3] ; Catherine Wolfram ^[3] ; Patrick Baylis ^[1] ; C Anna Spurlock ^[2] ; Annika Todd-Blick ^[2] ; Peter Cappers ^[2]
  1. [1] University of British Columbia

     University of British Columbia

     Canadá

     
  2. [2] Lawrence Berkeley National Laboratory

     Lawrence Berkeley National Laboratory

     Estados Unidos

     
  3. [3] UC Berkeley and NBER

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• Localización: Review of economic studies, ISSN 0034-6527, Vol. 88, Nº 6, 2021, págs. 2886-2934
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • We study default effects in the context of a residential electricity-pricing program. In the large-scale randomized controlled trial we analyse, one treatment group was given the option to opt-in to time-varying pricing while another was defaulted into the program but allowed to opt-out. We provide dramatic evidence of a default effect on program participation, consistent with previous research. A novel feature of our study is that we also observe how the default manipulation impacts customers’ subsequent electricity consumption. Passive consumers who did not opt-out but would not have opted in—comprising more than 70% of the sample—nonetheless reduce consumption in response to higher prices. Observing of this follow-on behaviour enables us to assess competing explanations for the default effect. We draw conclusions about the likely welfare effects of defaulting customers onto time-varying pricing.