Accelerating Consumer Durable Replacement in Low-Income Households

The paper presented in this QUEST Seminar studies the effect of pecuniary and behavioral inducements on durable goods replacement in a refrigerator replacement program targeted at low-income households. A dataset from a large-scale Germany wide program lets the authors observe investment decisions by 80,000 low-income households eligible for refrigerator replacement. Exploiting exogenously imposed temporal discontinuities in subsidy levels and voucher expiration deadlines, they investigate how the program design affects energy-efficient technology adoption. Both a higher subsidy as well as setting a voucher expiration deadline significantly increase the propensity of low-income households to invest in energy-efficient durables.