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Choosing Who Chooses: Selection-driven targeting in energy rebate programs

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Listed:
  • IDA Takanori
  • ISHIHARA Takunori
  • ITO Koichiro
  • KIDO Daido
  • KITAGAWA Toru
  • SAKAGUCHI Shosei
  • SASAKI Shusaku

Abstract

We develop an optimal policy assignment rule that integrates two distinctive approaches commonly used in economics—targeting by observable characteristics and targeting through self-selection . Our method uses experimental or quasi-experimental data to identify who should be treated, untreated, and who should self- select to achieve a policymaker’s objective. Applying this method to a randomized controlled trial on a residential energy rebate program, we find that targeting that leverages both observable data and self- selection outperforms conventional targeting for a standard utilitarian welfare function and welfare functions that balance the equity-efficiency trade-off. We highlight that the LATE framework (Imbens and Angrist, 1994) can be used to investigate the mechanism behind our approach. By introducing new estimators called the LATEs for takers and non-takers , we show that our method allows policymakers to identify whose self-selection would be valuable and harmful to social welfare.

Suggested Citation

  • IDA Takanori & ISHIHARA Takunori & ITO Koichiro & KIDO Daido & KITAGAWA Toru & SAKAGUCHI Shosei & SASAKI Shusaku, 2023. "Choosing Who Chooses: Selection-driven targeting in energy rebate programs," Discussion papers 23011, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:23011
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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