Doctoral Dissertation Research: Economics of a Light Bulb: Experimental Evidence on CFLs and End-User Behavior

Harvard University, Cambridge MA

Investigators

Abstract

ECONOMICS OF A LIGHT BULB: EXPERIMENTAL EVIDENCE ON CFLS AND END-USER BEHAVIOR Eliana Carranza and Robyn Meeks Abstract Residential access to modern energy and lighting is considered to be important for development as it improves living standards and productivity. However, developing countries can face severe constraints on available electricity. As a consequence, residential electricity use is limited and households pay prices that can be as high as those observed in wealthier nations. In the developing world, where lighting is a major component of residential electricity consumption, energy efficient technologies such as compact fluorescent lamps (CFLs) can offer electricity savings and allow more energy services. Still, where CFLs have been introduced in developing countries through mass replacement programs at a zero or subsidized price, their use is often discontinued once the consumer is required to pay the full price. This represents a major constraint to realizing the potential impacts of energy efficient lighting. To better understand the adoption, continued use, and diffusion process of the CFL technology, this study uses randomized experiments to inspect two major mechanisms: (1) the ?rebound? effect, which is the result of behavioral responses that boost consumption and offset CFLs? technologically feasible electricity savings, and (2) the role of ?peer? networks in spreading information on a new technology. Although the initial adoption of CFLs may be limited because the willingness to pay (WTP) is lower than the market price, their diffusion may be restricted if information is too noisy or if a greater importance is put on negative rather than positive information. The study furthers knowledge on the behavioral barriers that arise from end-user interactions with energy-efficient technologies. The findings are relevant to several aspects of energy conservation policy. Examination of the rebound will inform the optimal combination of innovation and price policies and the trade-off between welfare and electricity conservation. Examination of peer- networks will discern between different learning mechanisms and tell how best to advance CFLs? diffusion. Lastly, WTP studies assist in developing strategies for optimal pricing and subsidies. Beyond the policy relevance for CFL programs deployed recently in developing countries, lessons learned regarding responses to energy efficient technologies have behavioral implications that are also relevant to developed countries.