Nudging Energy Efficiency Behavior: The Role of Information Labels

Richard Newell and Juha Siikamäki

RFF Working Paper Series from Resources for the Future

Abstract: We evaluate the effectiveness of energy efficiency labeling in guiding household appliance choice decisions. Using a carefully designed choice experiment with several alternative labeling treatments, we disentangle the relative importance of different types of information and intertemporal behavior (i.e., discounting) in guiding energy efficiency behavior. We find that simple information on the economic value of saving energy was the most important element guiding more cost-efficient investments in appliance energy efficiency, with information on physical energy use and carbon dioxide emissions having additional but lesser importance. The degree to which the current EnergyGuide label guided cost-efficient decisions depends importantly on the discount rate assumed appropriate for the analysis. Using individual discount rates separately elicited in our study, we find that the current EnergyGuide label came very close to guiding cost-efficient decisions, on average. However, using a uniform five percent rate for discounting—which was much lower than the average individual elicited rate—the EnergyGuide label led to choices that result in a one-third undervaluation of energy efficiency. We find that labels that not only nudged people with dispassionate monetary or physical information, but also endorsed a model (with Energy Star) or gave a suggestive grade to a model (as with the EU-style label), had a substantial impact in encouraging the choice of appliances with higher energy efficiency. Our results reinforce the centrality of views on intertemporal choice and discounting, both in terms of understanding individual behavior and in guiding public policy decisions.

Keywords: energy efficiency behavior; gap; information label; discounting; time preference gap; choice experiment; mixed logit (search for similar items in EconPapers)
JEL-codes: C91 D12 D83 D91 H43 Q41 Q48 (search for similar items in EconPapers)
Date: 2013-07-03
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-exp, nep-pke, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Journal Article: Nudging Energy Efficiency Behavior: The Role of Information Labels (2014)
Working Paper: Nudging Energy Efficiency Behavior: The Role of Information Labels (2013)
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