UC San Diego

Chapter 1 analyzes optimal policy when consumers of energy-using durables deviate from a neoclassical benchmark due to misperception of future energy costs and/or prosocial preferences. These two behavioral deviations can either offset or compound for any given individual, creating groups of observationally equivalent consumers. Whereas optimal policy depends crucially on the behavioral rationale underlying choices. We characterize optimal second-best policy in the simultaneous presence of myopia and prosociality. Our theoretical analysis and simulation results demonstrate that the occurrence of prosocial behavior in addition to myopia strengthens product subsidies while concurrently reducing energy taxes. The added dimension of heterogeneity interferes with policy targeting and may limit potential welfare gains from the second-best policy.

Chapter 2 explores the interaction between financial purchase subsidies and charging infrastructure development in promoting electric vehicle (EV) adoption. Leveraging survey data from the Clean Vehicle Rebate Project (CVRP) and spatial information on charging stations, we find a significant positive impact of higher charging station density on self reported essentiality of CVRP rebates in EV acquisition decisions. The results exhibit substantial heterogeneity between low- and high-income individuals due to their divergent refueling necessities. Our findings reveal a mutually beneficial relationship between improving charging prevalence and providing purchase subsidies, advocating a hybrid policy formulation combining these two types of incentives to optimize the overall cost-effectiveness in accelerating EV adoption.

Chapter 3 investigates the impacts of incorporating family size into increasing block pricing (IBP) of residential electricity on social equity and efficiency. We first identify heterogeneous electricity demand elasticity between small and large families using an instrumental variable approach. We then conduct a comparative analysis between the IBP with and without the family-size adjustment by assessing their redistributional outcomes and transfer-related costs compared to a break-even flat rate. Our analysis reveals that the family-size-based IBP can generate intended redistributional outcomes with limited efficiency costs, regardless of whether per capita or total income is prioritized for evaluating social equity. Conversely, the IBP without considering family size mistakenly collects money from households with the lowest per-capita income. These findings suggest incorporating family-size-based criteria into electricity pricing could be a promising way to efficiently improve social equity.