Cleaner nudges? Policy labels and investment decision-making
Recent evidence suggests that labeling of unconditional cash transfer leads recipients to spend more on the labeled good. In this paper we show that the Winter Fuel Payment has distortionary effects on the market for goods related to the labeled product, renewable technologies. Using the sharp eligibility criteria of the transfer at age 60 in a Regression Discontinuity Design with age as a running variable, this analysis finds a robust reduction in the propensity to install renewable energy technologies of 1.2 percentage points. Falsification tests support the labeling hypothesis. As a result, households use too much energy from sources which generate pollution and too little from relatively cleaner technologies.
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