Context and meaningfulness in energy efficiency labeling: Real estate listings

Abstract

Research on heuristics and energy labels shows that the decision context and the meaningfulness of energy information can affect decision-making. In this experiment, we test whether home energy labels that differ in how they present context information about energy savings, and whether those labels include energy cost information that matters to consumers, differ in their ability to influence home buying decisions. A simulated real estate website used by a national sample of U.S. home buyers (N = 1538) shows that energy efficiency labels with more salient context information can more effectively encourage selection of efficient homes. The mock website experimentally tested energy labels with varying levels of context information and employed a disguised discrete choice task as the dependent variable. Using home buyers’ clicking behavior on the mock website, we calculated the likelihood of clicking on efficient listings and willingness to increase purchase price for efficiency. Presenting efficiency as a score along a line provided the most salient context information of all labels. It was also the most effective method of encouraging home buyers to select efficient listings and place a high monetary value on efficiency. Presenting efficiency information for only the most efficient homes (voluntary labelling) reduced the amount of context information available to consumers and was least effective at encouraging selection of efficient homes. Energy cost information in energy labels was only moderately effective in this experiment, possibly because of unintended context effects. Results demonstrate the importance of context information in labels as well as the importance of heuristics such as the anchoring heuristic.