Primary Research Focuses: Environmental Economics, Public Economics

Secondary Research Focuses: Behavioral Economics, Experimental Economics

References: 

• Michael Greenstone (Committee Co-chair)
• Leonardo Bursztyn (Committee Co-chair)
• Koichiro Ito

Job Market Paper: "Onset of Offsets: The Evolution of Social Rewards in Demand for Environmental Goods"

[Abstract] Annual consumer expenditures on retail goods with environmental benefits are projectedto reach$400 billion by 2032. I estimate how the visibility of such environmental goods in-fluences demand via ‘social rewards’ that are garnered by consumers and change as a good’smarket evolves. I run an online RCT that generates variation in price, purchase visibility,and perceived market penetrations of carbon offsets – an environmental good. I show thatsocial rewards increase willingness-to-pay by 87% for environmental goods which are seen ashaving near-0% market penetration. This effect dissipates quickly for goods which are seenas more common, dropping below 15% for market penetrations of 12-50%. Consequently, Ishow that subsidies for carbon mitigation should be set$10 below the social cost of carbonfor uncommon goods, sloping upwards in market penetration as social rewards disappearand consumer WTP for carbon mitigation decreases. Such findings highlight that socialrewards are important drivers in demand for environmental goods, particularly when goodsare uncommon.