In 2015, the Israeli government approved a controversial deal with a US-Israeli partnership that controlled virtually all the natural gas supply in Israel--at great cost to the Israeli public. Central to the controversy was the political decision not to interfere with a provision--in the most significant gas agreement to the Israeli public to date--that sets artificially high gas prices and represents excess costs of billions of shekels over the 17-year lifetime of the deal.
Choice defaults are an increasingly popular public policy tool. Yet there is little knowledge of the distributional consequences of such nudges for different groups in society. We report results from a field study in the residential electricity market in which we contrast consumers’ contract choices under an existing default regime with active choices without any default. We find that the default is successful at curbing greenhouse gas emissions, but it leads poorer households to pay more for their electricity consumption than they would want to, while leaving a significant willingness to pay for green electricity by richer households untapped.