Inflation Concerns and Green Product Consumption: Evidence from a Nationwide Survey and a Framed Field Experiment
Sabrina Jeworrek, Lena Tonzer
IWH Discussion Papers,
No. 10,
2024
Abstract
Promoting green product consumption is one important element in building a sustainable society. Yet green products are usually more costly. In times of high inflation, not only budget constraints but also the fear that prices will continue to rise might dampen green product consumption and, hence, limit the effectiveness of exerted efforts to promote sustainable behaviors. To test this suggestion, we conducted a Germany-wide survey with almost 1,200 respondents, followed by a framed field experiment (N=500) to confirm causality. In the survey, respondents’ stated “green” purchasing behavior is, as to be expected, positively correlated with concerns about climate change. It is also negatively correlated with concerns about future inflation and energy costs, but after controlling for observable characteristics such as income and educational level only the correlation with concerns about future prices remains significant. This result is driven by individuals with below-median environmental attitude. In the framed field experiment, we use the priming method to manipulate the saliency of inflation concerns. Whereas sizably relaxing the budget constraint (i.e., by 50 percent) has no impact on the share of organic products in participants’ baskets, the priming significantly decreases the share of organic products for individuals with below-median environmental attitude, similar to the survey data.
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The Macroeconomics of Epidemics
Martin S. Eichenbaum, Sergio Rebelo, Mathias Trabandt
Review of Financial Studies,
No. 11,
2021
Abstract
We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics. Our model implies that people cut back on consumption and work to reduce the chances of being infected. These decisions reduce the severity of the epidemic but exacerbate the size of the associated recession. The competitive equilibrium is not socially optimal because infected people do not fully internalize the effect of their economic decisions on the spread of the virus. In our benchmark model, the best simple containment policy increases the severity of the recession but saves roughly half a million lives in the United States.
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Do House Prices Drive Aggregate Consumption?
Marian Berneburg, Axel Lindner
Wirtschaft im Wandel,
No. 10,
2006
Abstract
In recent times increasing house prices have been credited with a stong positive influence on aggre-gate consumption. But it is questionable in how far higher prices are at all able to lift the purchasing power of the economy as whole: The seller’s profit of a high price, equals the buyer’s loss. But while a positive correlation between house prices and consumption is evident, it is not a sign of irra-tional behaviour by market participants. In fact it seems that both factors are driven by other pa-rameters: the interest rate and expectations about future interest rates and economic activity. For a selection of four developed countries, the follow-ing article tries to give an explanation for the house price developments of the past 15 years. While disregarding country specific risk as well as institutional aspects and demographic factors, a present value caluclation forms the basis for esti-mating a fundamentally justified price movement. Expectations for future rents and discount rates are being proxied by a moving average of past values. It can be observed how interest rate changes and long-run economic growth, two as-pects that clearly also drive private consumption, play a key role here.
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Network Access Charges, Vertical Integration, and Property Rights Structure
Christian Growitsch, Thomas Wein
Energy Economics,
No. 2,
2005
Abstract
After the deregulation of the German electricity markets in 1998, the German government opted for a regulatory regime called negotiated third party access, which would be subject to ex post control by the federal cartel office. Network access charges for new competitors are based on contractual arrangements between energy producers and industrial consumers. As the electricity networks are incontestable natural monopolies, the local and regional network operators are able to set (monopolistic) charges at their own discretion, limited only by their concerns over possible interference by the federal cartel office (Bundeskartellamt). In this paper we analyse if there is evidence for varying charging behaviour depending on a supplier`s economic independence (structure of property rights) or its level of vertical integration. For this purpose we hypothesise that incorporated and vertically integrated suppliers set different charges than independent utility companies. Multivariate estimations show a relation between network access charges and the network operator’s economic independence as well as level of vertical integration. On the low voltage level, for an estimated annual consumption of 1700 kW/h, vertically integrated firms set – as predicted by our hypothesis - significantly lower access charges than vertically separated suppliers, whereas incorporated network operators charge significantly higher charges compared to independent suppliers. There is insufficient evidence available to confirm these results for other consumptions or voltage levels.
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