IDEAS home Printed from https://ideas.repec.org/p/wil/wileco/2004-16.html
   My bibliography  Save this paper

Conservation Behavior: From Voluntary Restraint to a Voluntary Price Premium

Author

Abstract

This paper provides a theoretical and empirical investigation of conservation behavior that is motivated by concern for the environment. Two types of behavior are considered. First, individuals who care about environmental quality may voluntarily restrain their consumption of goods and services that generate a negative externality. Second, individuals may choose to pay a voluntary price premium for goods and services that are more "environmentally friendly." A theoretical model highlights the relationship between such voluntary restraint and a voluntary price premium. We test predictions of the model in an empirical study of household electricity consumption with introduction of a price-premium, green-electricity program. We find evidence of voluntary restraint and its relation to a voluntary price premium. The empirical results are consistent with the model of conservation behavior, as none of the theoretical predictions can be rejected.

Suggested Citation

  • Matthew J. Kotchen & Michael R. Moore, 2004. "Conservation Behavior: From Voluntary Restraint to a Voluntary Price Premium," Department of Economics Working Papers 2004-16, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2004-16
    as

    Download full text from publisher

    File URL: https://web.williams.edu/Economics/wp/kotchenconserv.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. A. E. Peck & O. C. Doering III, 1976. "Voluntarism and Price Response: Consumer Reaction to the Energy Shortage," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 287-292, Spring.
    2. Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
    3. Rose, Steven K. & Clark, Jeremy & Poe, Gregory L. & Rondeau, Daniel & Schulze, William D., 2002. "The private provision of public goods: tests of a provision point mechanism for funding green power programs," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 131-155, February.
    4. Roe, Brian & Teisl, Mario F. & Levy, Alan & Russell, Matthew, 2001. "US consumers' willingness to pay for green electricity," Energy Policy, Elsevier, vol. 29(11), pages 917-925, September.
    5. Harbaugh, William T, 1998. "The Prestige Motive for Making Charitable Transfers," American Economic Review, American Economic Association, vol. 88(2), pages 277-282, May.
    6. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    7. Andrew A. Goett & Kathleen Hudson & Kenneth E. Train, 2000. "Customers' Choice Among Retail Energy Suppliers: The Willingness-to-Pay for Service Attributes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-28.
    8. Train, Kenneth E & McFadden, Daniel L & Goett, Andrew A, 1987. "Consumer Attitudes and Voluntary Rate Schedules for Public Utilities," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 383-391, August.
    9. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    10. Albert Yin-Po Lee, 1981. "Voluntary Conservation and Electricity Peak Demand: A Case Study of the Modesto Irrigation District," Land Economics, University of Wisconsin Press, vol. 57(3), pages 436-447.
    11. Hollander, Heinz, 1990. "A Social Exchange Approach to Voluntary Cooperation," American Economic Review, American Economic Association, vol. 80(5), pages 1157-1167, December.
    12. Hartman, Raymond S, 1988. "Self-Selection Bias in the Evaluation of Voluntary Energy Conservation Programs," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 448-458, August.
    13. Patricia Champ & Richard Bishop, 2001. "Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(4), pages 383-402, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ward, David O. & Clark, Christopher D. & Jensen, Kimberly L. & Yen, Steven T., 2011. "Consumer willingness to pay for appliances produced by Green Power Partners," Energy Economics, Elsevier, vol. 33(6), pages 1095-1102.
    2. Kotchen, Matthew J. & Moore, Michael R., 2007. "Private provision of environmental public goods: Household participation in green-electricity programs," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 1-16, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthew Kotchen & Michael Moore, 2008. "Conservation: From Voluntary Restraint to a Voluntary Price Premium," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(2), pages 195-215, June.
    2. Roland Menges & Carsten Schroeder & Stefan Traub, 2005. "Altruism, Warm Glow and the Willingness-to-Donate for Green Electricity: An Artefactual Field Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(4), pages 431-458, August.
    3. Kotchen, Matthew J. & Moore, Michael R., 2007. "Private provision of environmental public goods: Household participation in green-electricity programs," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 1-16, January.
    4. Jacobsen, Grant D. & Kotchen, Matthew J. & Vandenbergh, Michael P., 2012. "The behavioral response to voluntary provision of an environmental public good: Evidence from residential electricity demand," European Economic Review, Elsevier, vol. 56(5), pages 946-960.
    5. Serge-Christophe Kolm, 2008. "Paradoxes of the War on Poverty: Warm-Glows and Efficiency," IDEP Working Papers 0807, Institut d'economie publique (IDEP), Marseille, France, revised 18 Nov 2008.
    6. Jen Shang & Rachel Croson, 2009. "A Field Experiment in Charitable Contribution: The Impact of Social Information on the Voluntary Provision of Public Goods," Economic Journal, Royal Economic Society, vol. 119(540), pages 1422-1439, October.
    7. Emel Filiz-Ozbay & Erkut Ozbay, 2014. "Effect of an audience in public goods provision," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 200-214, June.
    8. Xiaoting Zheng & Jiayue Chen & Yipeng Li, 2021. "The association between charitable giving and happiness: Evidence from the Chinese General Social Survey," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(6), pages 2103-2138, December.
    9. Charles Sims, 2013. "Hypothetical Market Familiarity and the Disconnect Between Stated and Observed Values for Green Energy," International Journal of Energy Economics and Policy, Econjournals, vol. 3(1), pages 10-19.
    10. Ma, Chunbo & Burton, Michael, 2016. "Warm glow from green power: Evidence from Australian electricity consumers," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 106-120.
    11. Dagher, Leila & Bird, Lori & Heeter, Jenny, 2017. "Residential green power demand in the United States," Renewable Energy, Elsevier, vol. 114(PB), pages 1062-1068.
    12. Jingping Li & Yohanes E. Riyanto, 2017. "Category Reporting In Charitable Giving: An Experimental Analysis," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 397-408, January.
    13. Bracha, Anat & Vesterlund, Lise, 2017. "Mixed signals: Charity reporting when donations signal generosity and income," Games and Economic Behavior, Elsevier, vol. 104(C), pages 24-42.
    14. Luigi Butera & Jeffrey Horn, 2013. "Good News, Bad News, and Social Image: The Market for Charitable Giving," Working Papers 1041, George Mason University, Interdisciplinary Center for Economic Science, revised Mar 2016.
    15. Daniel M. Hungerman, 2007. "Diversity and Crowd-out: A Theory of Cold-Glow Giving," NBER Working Papers 13348, National Bureau of Economic Research, Inc.
    16. Welsch, Heinz & Kühling, Jan, 2009. "Determinants of pro-environmental consumption: The role of reference groups and routine behavior," Ecological Economics, Elsevier, vol. 69(1), pages 166-176, November.
    17. Keval Amin & Erica Harris, 2022. "The Effect of Investor Sentiment on Nonprofit Donations," Journal of Business Ethics, Springer, vol. 175(2), pages 427-450, January.
    18. Anya Samek & Roman M. Sheremeta, 2017. "Selective Recognition: How to Recognize Donors to Increase Charitable Giving," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1489-1496, July.
    19. Anya Savikhin & Roman Sheremeta, 2010. "Visibility of Contributions and Cost of Information: An Experiment on Public Goods," Working Papers 10-22, Chapman University, Economic Science Institute.
    20. Stefano Barbieri & David A. Malueg, 2014. "Increasing Fundraising Success by Decreasing Donor Choice," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 372-400, June.

    More about this item

    Keywords

    Consumer; Electricity; Environment; Households; Individual;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wil:wileco:2004-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stephen Sheppard (email available below). General contact details of provider: https://edirc.repec.org/data/edwilus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.