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Crowding-in, crowding-out and over-crowding: The interaction between price and quantity based instruments and intrinsic motivation

Author

Listed:
  • Grischa Perino

    (School of Economics and CBESS, University of East Anglia)

  • Luca A. Panzone

    (Sustainable Consumption Institute,University of Manchester (UK) and University College London (UK))

  • Timothy Swanson

    (Centre for International Environmental Studies, Graduate Institute of International and Development Studies, Geneva)

Abstract

We conduct a field experiment involving real purchasing decisions in a large supermarket chain to test the effect of different regulatory interventions aiming to induce a more climate-friendly diet on intrinsic motivation. Focusing on shoppers who prefer the dirty variety, we compare labeling, a subsidy, a product ban and neutrally framed versions of the latter two in their ability to induce shoppers to switch to cleaner varieties. Carbon footprint labels and bans activate intrinsic motivation of shoppers (crowding-in). Remarkably, a subsidy framed as an explicit intervention is less effective than both a label and an equivalent but neutrally framed price change. The effects of information and changes in relative prices are not only not additive (crowding-out) but combined perform worse than each individually (over-crowding). We therefore find markedly different effects of price and quantity based instruments on intrinsic motivation.

Suggested Citation

  • Grischa Perino & Luca A. Panzone & Timothy Swanson, 2011. "Crowding-in, crowding-out and over-crowding: The interaction between price and quantity based instruments and intrinsic motivation," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 11-10, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:wcbess:11-10
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    File URL: https://www.uea.ac.uk/documents/166500/14307614/CBESS-11-10.pdf/607a7840-19b8-4ed8-bb5e-f38bf21b90b9
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    References listed on IDEAS

    as
    1. Uri Gneezy & Aldo Rustichini, 2000. "Pay Enough or Don't Pay at All," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 791-810.
    2. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    3. Montero, Juan-Pablo, 2002. "Prices versus quantities with incomplete enforcement," Journal of Public Economics, Elsevier, vol. 85(3), pages 435-454, September.
    4. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
    5. Timo Goeschl & Grischa Perino, 2012. "Instrument Choice and Motivation: Evidence from a Climate Change Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(2), pages 195-212, June.
    6. Michael Kosfeld & Armin Falk, 2006. "The Hidden Costs of Control," American Economic Review, American Economic Association, vol. 96(5), pages 1611-1630, December.
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    Citations

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    Cited by:

    1. Panzone, Luca & Perino, Grischa & Swanson, Timothy & Leung, Denise, 2011. "Testing for the Best Instrument to Generate Sustainable Food Consumption," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 2(3).

    More about this item

    Keywords

    Motivation crowding; prices vs quantities; climate policy; diet choices; field experiment;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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