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A large-scale test of the effects of time discounting, risk aversion, loss aversion and present bias on household adoption of energy efficient technologies

Joachim Schleich, Xavier Gassmann, Thomas Meissner and Corinne Faure

No S04/2018, Working Papers "Sustainability and Innovation" from Fraunhofer Institute for Systems and Innovation Research (ISI)

Abstract: This paper empirically and jointly analyses the relations between risk aversion, standard time discounting, present bias, and loss aversion and household stated adoption of low to high stake energy efficiency technologies (EETs) (light emitting diodes (LEDs), energy efficient appliances, and retrofit measures). The analysis relies on a large representative sample drawn from eight European Union countries. Preferences over time, risk and losses were elicited and jointly estimated from participant choices in incentivized, context-free multiple price list experiments. The findings from econometrically estimating EET adoption equations suggest that present-biased individuals are less likely to adopt EETs. They also provide (weak) evidence that individuals which are more risk-averse, or more loss-averse, or which exhibit a lower discount factor are less likely to adopt EETs. Finally, omitting one or several of the time and risk or loss-aversion parameters when estimating the EET adoption equations did not appear to cause omitted variable bias.

Keywords: risk aversion; time discounting; present bias; loss aversion; energy efficiency; adoption (search for similar items in EconPapers)
JEL-codes: D23 D81 Q41 Q48 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ene, nep-eur and nep-upt
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Related works:
Journal Article: A large-scale test of the effects of time discounting, risk aversion, loss aversion, and present bias on household adoption of energy-efficient technologies (2019) Downloads
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