Is there an energy efficiency gap in China? Evidence from an information experiment

Abstract

We use an incentivized field experiment to test whether Chinese consumers underinvest in energy efficiency. We document that providing information to Chinese consumers on the energy costs of lightbulbs significantly increases their willingness to pay for energy-efficient bulbs, even among those who previously overestimated the savings from energy efficiency. Our results indicate that Chinese consumers are imperfectly informed, but that neither biased beliefs nor salience can explain their underinvestment in energy efficiency. Rather, we contend that consumers underinvest in energy efficiency because they are uncertain about the savings from energy efficient products.