The Persistence of Moral Suasion and Economic Incentives: Field experimental evidence from energy demand

Author Name ITO Koichiro (Fellow, RIETI) /IDA Takanori (Kyoto University) /TANAKA Makoto (GRIPS)
Creation Date/NO. February 2015 15-E-014
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Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy conservation during peak demand hours. Using household-level consumption data for 30-minute intervals, we find significant short-run effects of moral suasion, but the effects diminish quickly after repeated interventions. Economic incentives produce larger and persistent effects, which induce habit formation after the final interventions. While each policy produces substantial welfare gains, economic incentives provide particularly large gains when considering persistence.

Published: Ito, Koichiro, Takanori Ida, and Makoto Tanaka, 2018. "Moral suasion and economic incentives: Field experimental evidence from energy demand," American Economic Journal: Economic Policy, Vol. 10(1), pp. 240-267.