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Designing More Effective Subsidy Programs to Expand Access

The User Insights Lab (UIL) is developing design principles for clean cooking subsidy programs that incorporate behavioral insights to maximize clean cooking adoption among the most vulnerable customer segments.​  

Why this is needed: End user subsidy programs deliver financial benefits, such as cash payments or vouchers, to households to promote public objectives, like increasing access to clean cooking. End user subsidies, including those financed through the sale of carbon credits, are crucial for achieving universal access to clean cooking because they increase the affordability of clean cookstoves and fuels for lower income populations. Yet, there’s limited evidence on how to design subsidy programs to foster sustainable market systems and ensure efficient allocation of public resources. For example, it is inefficient to use scarce public resources to support the purchase of a clean cookstove by someone who was already planning to buy one for the full price. Further, subsidies can have complex unintended consequences, such as distorting prices and reducing willingness to pay for consumers who do not receive a subsidy.  

What the UIL did: To better understand how insights into consumer behavior and decision making might inform the design of clean cooking subsidies intended to increase the uptake of clean cooking solutions, the UIL conducted a discrete choice experiment with potential customers in Nairobi and Isiolo, Kenya. By simulating real-life scenarios, the experiment explored participants’ responses to subsidies of varying amounts and structures, across different clean cooking technologies. For example, the experiment is able to see how potential customers would react to a more expensively priced stove, subsidized through a cash transfer paid in monthly installments as compared to a less expensive stove subsidized through a discount, but where the discounted price is paid in full at the time of purchase. 

What the UIL will learn: The choice experiment will provide insight on willingness to pay for clean cooking solutions, the tradeoffs that potential customers make when considering a variety of subsidy amounts and structures, and factors that impact those choices. ​In addition, the UIL will learn whether using subsidies to decrease prices below certain thresholds is, or is not, likely to deliver meaningful gains in adoption. 

What’s next. The UIL will work with subsidy designers to put these principles into practice and gather more evidence on the role that subsidies play in achieving universal access to clean cooking. The UIL’s current partnership provides the opportunity to influence subsidy programs worth over $25 million and targeting over 150,000 potential customers.