Mitigating Hypothetical Bias Evidence on the Effects of Correctives from a Large Field Study

The overestimation of willingness-to-pay (WTP) in hypothetical responses is a wellknown finding in the literature. Various techniques have been proposed to remove or, at least, reduce this bias. Using responses from a panel of about 6,500 German households on their WTP for a variety of power mixes, this article undertakes an analysis that combines two common ex-ante approaches - cheap talk and consequential script - with the ex-post certainty approach to calibrating hypothetical WTP responses. Based on a switching regression model that accounts for the potential endogeneity of respondent certainty, we find that while neither the cheap-talk nor the consequential script corrective bears on the estimates of WTP, there is evidence for a lower WTP among those respondents who classify themselves as definitely certain about their answers.Die Überschätzung von Zahlungsbereitschaften in hypothetischen Befragungssituationen ist ein in der Literatur wohlbekanntes Phänomen. Um diese Verzerrungen zu verhindern oder zumindest zu reduzieren, wurden verschiedene Ansätze vorgeschlagen, darunter die Cheap Talk und Consequential Script genannten Ex-Ante Ansätze sowie ein als Sicherheits-Ansatz bezeichnetes Ex-Post-Korrektiv. Auf Grundlage einer Befragung von etwa 6.500 deutschen Haushalten zu ihrer Zahlungsbereitschaft für verschiedene Strommixe analysiert dieser Artikel die Effektivität dieser Korrektive. Basierend auf einem Switching-Regression-Model, welches die potenzielle Endogenität der Sicherheit der Befragten berücksichtigt, finden wir empirische Evidenz dafür, dass sich weder Cheap Talk noch der Consequential-Script Ansatz auf die geschätzten Zahlungsbereitschaften auswirkt. Es findet sich jedoch eine geringere Zahlungsbereitschaft unter solchen Antwortenden, die sich selbst als ganz sicher in Bezug auf ihre Antworten einstufen

Housing, Energy Cost, and the Poor: Counteracting Effects in Germany's Housing Allowance Program

Adequate housing and affordable warmth are essential human needs, the lack of which may seriously harm people's health. Germany provides an allowance to low-income households, covering the housing as well as the space heating cost, to protect people from the consequences of poor housing conditions and fuel poverty. In order to limit public expenditures, payment recipients are required to choose low-cost dwellings, with the consequence that they probably occupy flats with a poor thermal performance. Recipients are thus likely to have a higher energy consumption and energy expenditures. Using a large data set of German households, this paper demonstrates that this counteracting effect is of negligible magnitude. Yet, from an ecological perspective, the allowance scheme creates distorted incentives and should be reformed

Germany’s Solar Cell Promotion: An Unfolding Disaster

This article revisits an analysis by Frondel, Ritter and Schmidt (2008) of Germany's Renewable Energy Act, which legislates a system of feed-in tariff s to promote the use of renewable energies. As in the original article, we argue that Germany's support scheme subsidizes renewable energy technologies not based on their long-term market potential, but rather on their relative lack of competitiveness, with the photovoltaics (PV) technology enjoying high feed-in tariffs, currently over double those of onshore wind. The result is explosive costs with little to show for either environmental or employment benefits. Indeed, we document that the immense costs foreseen by Frondel and colleagues have materialized: Our updated estimate of the subsidies for PV, at 100 Bn €, exceeds their expectations by about 60%. Moreover, with installed PV capacities growing at a rapid rate, these costs will continue to accumulate, diverting resources from more cost-effective climate protection instruments

How Effective are Energy-Efficiency Incentive Programs? Evidence from Italian Homeowners

We evaluate incentives for residential energy upgrades in Italy using data from an original survey of Italian homeowners. In this paper, attention is restricted to heating system replacements, and to the effect of monetary and non-monetary incentives on the propensity to replace the heating equipment with a more efficient one. To get around adverse selection and free riding issues, we ask stated preference questions to those who werent planning energy efficiency upgrades any time soon. We argue that these persons are not affected by these behaviors. We use their responses to fit an energy-efficiency renovations curve that predicts the share of the population that will undertake these improvements for any given incentive level. This curve is used to estimate the CO2 emissions saved and their cost-effectiveness. Respondents are more likely to agree to a replacement when the savings on the energy bills are larger and experienced over a longer horizon, and when rebates are offered to them. Reminding about CO2 (our non-monetary incentive) had little effect. Even under optimistic assumptions, the cost-effectiveness of incentives of size comparable to that in the Italian tax credit program is generally not favorable