EIEE Webinar – Seminar

Title: Changing consumption behavior with carbon labels: Causal evidence on behavioral channels and effectiveness

Speaker: Anna Schulze Tilling, University of Bonn

Abstract: Carbon labels are an increasingly popular policy tool to decrease the carbon footprint of consumers’ choices. However, not much is known about their effectiveness relative to other policy instruments and the channels via which they affect behavior. Through a series of experiments, including two framed field experiments (N=289 and N=444, respectively) and one natural field experiment (involving more than 120,000 purchase decisions by over 10,000 customers) conducted in a student canteen setting, I provide causal evidence that carbon labels impact consumption behavior. I evaluate the labels’ effectiveness in comparison to a carbon tax, both through direct elicitation (framed field experiment) and by using pricing variations (natural field experiment). In both settings, I find that the overall effectiveness of the labels is similar to that of a carbon tax of Euro 120 per tonne. Further, complementary evidence from both settings conveys that the labels on average create psychological benefits for consumers. In the second framed field experiment, I identify the behavioral channels driving label effectiveness by varying treatment conditions. I find that carbon labels mainly impact consumers by directing attention towards carbon emissions, and less by correcting consumers’ perceptions about carbon footprints. Using a structural model and data from the second framed field experiment, I estimate that carbon labels on average increase consumer welfare.

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