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The role of energy and investment literacy for residential electricity demand and end-use efficiency

Julia Blasch, Nina Boogen (), Nilkanth Kumar and Massimo Filippini ()

No 17/269, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the generalized true random effects model (GTREM). A panel dataset of 1, 994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to improve efficiency in the use of energy within households.

Keywords: Stochastic frontier analysis; Transient and persistent efficiency; Energy literacy; Investment literacy; Energy saving behaviour; Residential electricity demand; Household data (search for similar items in EconPapers)
JEL-codes: D12 D13 D80 Q41 Q48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-ino
Date: 2017-03
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Journal Article: Explaining electricity demand and the role of energy and investment literacy on end-use efficiency of Swiss households (2017) Downloads
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