BC3. Basque centre for climate change – Klima aldaketa ikergai

Seminar / Mintegia / Seminario
Emission Tax, Health Insurance and Crowding out of Energy Conservation Behavior: An Experiment 

Lecturer: Dr. Pallab Mozumder
Department of Earth & Environment, Department of Economics and Social Science Laboratory, International Hurricane Research Center, Florida (Colombia).

Abstract:

A major share of domestic energy demand is met from conventional fossil fuel based sources, such as coal. Combustion of fossil fuels in production of energy causes emission of greenhouse gases and particle pollution, which leads to health hazards. As people are becoming increasingly concerned about these hazardous impacts, they may choose to reduce their energy consumption with energy saving installations. In this paper we present a decision-making experiment to understand motivation for energy saving choices in a diverse set of policy contexts. The experimental design includes multiple sets of decision-making choices differentiated with options to purchase health insurance. Altogether 64 subjects took part in 8 decision-making sessions. Every session consists of 3 sections and each section includes 30 rounds. In every round, subjects make a choice whether to spend on energy saving installations to decrease their household energy bill and emission related health risks. While each subject in the first and third section pays a lump sum emission tax, the emission tax is proportional to the total energy bill in the second section. Subjects make energy saving choices both with and without the option to purchase health insurance. The data collected in this experiment, allows us to see the effectiveness of a public policy intervention to increase energy efficiency. The empirical analysis suggests that energy savings increase when emission tax is proportional to total energy consumption. However, energy savings seem to be crowded out when subjects have the option to buy health insurance to cover pollution related health risks. We also find that rewarding scheme works better than the punishment scheme in promoting energy conservation. We discuss policy implications of our findings.

Co authored by: Chiradip Chatterjee, Department of Economics and Geography, University of North Florida  

If you are interested in attending the Seminar, please register yourself clicking here

[*] Limited capacity. Registration is mandatory

12th November 13:00-14:00, Faculty of Sarriko Room B.09

* The Seminar will be in English. / Mintegia ingelesez burutuko da. / El seminario se realizará en inglés.