Abstract
Imperfect information and inattention can lead consumers to undervalue the energy efficiency of products, contributing to growing environmental problems and climate change. To nudge individuals towards energy efficiency, environmental certification schemes, such as the European Union (EU) energy label, present grade-like efficiency classes. In a real-stakes randomized controlled trial, we contrast this approach with a control condition that gives no energy-related information and an alternative treatment condition that provides detailed information on the lifetime cost of energy-using durables. Our results show that the EU energy label does not increase demand for energy-efficient products over a control condition. By contrast, lifetime-cost information increases the willingness-to-pay for energy efficiency considerably.
Highlights
Many appliances we use in daily life have two cost components: an upfront purchase cost that is very salient, and a usage cost that accumulates over time and depends on the product’s energy efficiency
We have compared the effectiveness of two approaches to increase the WTP for energy efficiency: the current European Union (EU) label, which presents gradelike efficiency classes, and an intervention that informs participants about the total lifetime-cost savings that arise from more energy-efficient purchases
We find that the EU energy label has no statistically and economically significant effect on the WTP for the energy-efficient technology, while presenting detailed lifetime-cost information increases relative WTP for the energy-efficient LED bulbs by about 45% of baseline WTP
Summary
Original content from this work may be used under the terms of the Creative Commons Attribution 3.0 licence. Any further distribution of this work must maintain attribution to the author(s) and the title of the work, journal citation and DOI. Keywords: artefactual field experiment, behavioral economics, climate policies, environmental certification, carbon mitigation policies Supplementary material for this article is available online
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