Does Absolution Promote Sin? A Conservationist’s Dilemma

Abstract

This paper shows that households signing up for a green program exhibit an intriguing behavioral rebound effect: a promise to fully offset customers’ carbon emissions resulting from electricity usage increases their energy use post-adoption by 1–3%. The response is robust across empirical specifications, and is consistent with an economic model of rational energy consumption. Our results provide a cautionary tale for designing green product strategies in which the adoption of a product may lead to unexpected consequences.