Towards circular consumer behavior: Analysis of discount schemes on coffee cup use.

Through a natural experiment setting in Hong Kong, this study examines the effects of financial incentives and nudges on consumer choices among three types of coffee cups: bring-your-own-cup (BYOC), shop-provided reusable cups, and disposable cups. Our dataset comprises 223 structured observations of coffee shops with 522 data points. The financial incentive-a direct price instrument set as a discount-is offered exclusively to customers who bring their own cups, while shop-provided (reusable) cups are not eligible. The results indicate that a financial incentive is not associated with a positive change in the behavior of the rewarded consumers: In this study, the discount does not significantly encourage consumers to bring their own cups. However, we find negative effects related to the choice of cup by consumers not rewarded by the incentive: A negative spillover effect emerges: consumers who have not brought their cups and thus who do not qualify for the discount are more likely to choose disposable cups. These findings highlight the limited effectiveness of financial incentives and nudges in reducing disposable cup usage and suggest the need for broader strategies to encourage sustainable consumption.