Can Small Incentives Have Large Effects? The Impact of Taxes versus Bonuses on Disposable Bag Use

By Tatiana A. Homonoff. American Economic Journal: Economic Policy, 2018

140 citations recorded by the source corpus.

This paper examines a simple element of financial incentive—design whether the incentive takes the form of a fee for bad behavior or a reward for good behavior—to determine if the framing of the incentive influences the policy’s effectiveness. I investigate the effect of two similar policies aimed at reducing disposable bag use: a $0.05 tax $0.05 bonus for reusable bag use. While the tax decreased disposable bag use by over 40 percentage points, the bonus generated virtually no effect on behavior. These results are consistent with a model of loss aversion. (JEL D12, D91, H23)

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/44fff1edc1bc108f1696ded73a4da1fe0e14ec41

How researchers see this paper

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In Accounting

1. Robert Münscher
2. Max Vetter
3. Christian Schubert
4. Thomas Scheuerle

In Economics and Econometrics

1. Robert Münscher
2. Max Vetter
3. Christian Schubert
4. Thomas Scheuerle
5. Alexander Maedche
6. Dennis Hummel

Citations in the corpus

• Green nudges: Do they work? Are they ethical? (2016, background): “The power of loss aversion is also nicely illustrated by Homonoff (2013), finding that charging a $0.”
• A Review and Taxonomy of Choice Architecture Techniques (2016, background): “…provides “micro-incentives,” that is, changes of the consequences of decision options that are insignificant from a rational choice perspective (e.g., providing an improbable chance of winning a lottery or requiring middle class shoppers to pay five cents for a shopping bag, cf. Homonoff, 2012).”