Looking for free riding: Energy efficiency incentives and Italian homeowners

We examine the effect of energy efficiency incentives on household energy efficiency home improvements. Starting in February 2007, Italian homeowners have been able to avail themselves of tax credits on the purchase and installation costs of certain types of energy efficiency renovations. We examine two such renovations—door/window replacements and heating system replacements—using multi-year cross-section data from the Italian Consumer Expenditure Survey and focusing on a narrow period around the introduction of the tax credits. Our regressions control for dwelling and household characteristics and economy-wide factors likely to influence the replacement rates. The effects of the policy are different for the two types of renovations. With window replacements, the policy is generally associated with a 30 % or stronger increase in the renovation rates and number of renovations. In the simplest econometric models, the effect is not statistically significant, but the results get stronger when we allow for heterogeneous effects across the country. With heating system replacements, simpler models suggest that the tax credits policy had no effect whatsoever or that free riding was rampant, i.e., people are now accepting subsidies for replacements that they would have done anyway. Further examination suggests a strong degree of heterogeneity in the effects across warmer and colder parts of the country, and effects in the colder areas that are even more pronounced than those for window replacements. These results should, however, be interpreted with caution due to the low rates of renovations, which imply that the effects are estimated relatively imprecisely.

Carbon Sink Conservation and Global Justice: Benefiting, Free Riding and Non-Compliance

It is often assumed that in order to avoid the most severe consequences of global anthropogenic climate change we have to preserve our existing carbon sinks, such as for instance tropical forests. Global carbon sink conservation raises a host of normative issues, though, since it is debatable who should pay the costs of carbon sink conservation, who has the duty to protect which sinks, and how far the duty to conserve one’s carbon sinks actually extends, especially if it conflicts with other duties one might have. According to some, forested states like Ecuador have a duty to preserve their tropical forests while the rich states of the global North have a duty of fairness to compensate states like Ecuador for the costs they incur. My aim in this paper is to critically analyse this standard line of argument and to criticise its validity both internally (i.e. with regard to its normative conclusion based on its premises) and externally (i.e. with regard to the argument’s underlying assumptions and its lack of contextualisation). As I will argue, the duty to conserve one’s forests is only a particular instantiation of a wider, more general duty to contribute towards global climate justice for which the context in which one operates (e.g. whether other agents are complying with their duties of global climate justice or not) matters significantly.

Resolving questions about bias in real and hypothetical referenda

Despite 10 years of research on behavior in hypothetical referenda, conflict remains in the literature on whether or not the mechanism generates biased responses compared to real referenda, and the nature and source of any such bias. Almost all previous inquiry in respect of this issue has concentrated on bias at the aggregate level. This paper reports a series of three experiments which focuses on bias at the individual level and how this can translate to bias at the aggregate level. The authors argue that only an individual approach to hypothetical bias is consistent with the concept of incentive compatibility. The results of these experiments reflect these previous conflicting findings but go on to show that individual hypothetical bias is a robust result driven by the differing influence of pure self-interest and other-regarding preferences in real and hypothetical situations, rather than by a single behavioral theory such as free riding. In a hypothetical situation these preferences cause yea-saying and non-demand revealing voting. This suggests that investigation of individual respondents in other hypothetical one-shot binary choices may also provide us with insights into aggregate behavior in these situations.