Norms and economic motivation in the Swedish green electricity market

Abstract

The purpose of this paper is to provide an econometric analysis of the most important determinants of Swedish households' choice to pay a price premium for “green” electricity. We draw on recent developments in the literature on integrating norm-motivated behavior into neoclassical consumer theory, and assume that individuals have a preference for keeping a self-image as a morally responsible person. Consumer behavior in the “green market place” will then be heavily determined by how purchases of different goods affect this self-image. The analysis is based on postal survey responses from 655 Swedish households, which are analyzed within a binary choice econometric framework. The results indicate that the impact of choosing “green” on the household budget largely influences the choice between “green” and “brown” electricity, as does the degree of perceived personal responsibility for the issue and the felt ability to affect the outcome in a positive way. We find limited support for the notion that perceptions about others' behavior in general affect individual moral norms and ultimately expressed behavior, but this is also complemented by the influence of explicit social influence. The difficulty in observing others' purchases makes it however difficult to distinguish between social and moral norms in the case of “green” electricity.