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Information Nudges, Subsidies, and Crowding Out of Attention: Field Evidence from Energy Efficiency Investments

Matthias Rodemeier & Andreas Löschel

Journal of the European Economic Association2025https://doi.org/10.1093/jeea/jvae058article
AJG 4ABDC A*
Weight
0.48

Abstract

How can information substitute or complement financial incentives such as Pigouvian subsidies? We answer this question in a large-scale field experiment that cross-randomizes energy efficiency subsidies with information about the financial savings of LED lighting. Information has two effects: It shifts and rotates demand curves. The direction of the shift is ambiguous and highly dependent on the information design. Informing consumers that an LED saves 90% in annual energy costs increases LED demand, but showing them that 90% corresponds to an average of €11 raises demand for less efficient technologies. The rotation of the demand curve is unambiguous: Information dramatically reduces both own-price and cross-price elasticities, which makes subsidies less effective. The uniform decrease in price elasticities suggests that consumers pay less attention to subsidies when information is provided. We structurally estimate that welfare-maximizing subsidies can be 200% larger than the Pigouvian benchmark when combined with information.

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https://doi.org/https://doi.org/10.1093/jeea/jvae058

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@article{matthias2025,
  title        = {{Information Nudges, Subsidies, and Crowding Out of Attention: Field Evidence from Energy Efficiency Investments}},
  author       = {Matthias Rodemeier & Andreas Löschel},
  journal      = {Journal of the European Economic Association},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1093/jeea/jvae058},
}

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Evidence weight

0.48

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.41 × 0.4 = 0.16
M · momentum0.63 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.