Nudging energy efficiency behavior: The effect of message framing on implicit discount rate

Abstract

We experimentally and empirically analyzed how gain-framing and loss-framing information regarding the economic benefits of purchasing a high-efficiency appliance affects consumers' implicit discount rate (IDR). For the empirical analysis, we focused on the South Korean air purifier market, and we used the contingent valuation method to estimate the IDR. The results suggest differences in consumer groups that respond more sensitively to message framing. In the loss frame, the respondents' cognition level showed an influence on the IDR. The median IDR was 10.15% and 6.59% in the gain and loss frames, respectively. These figures were higher than the general market discount rate, regardless of how the given information was framed, thus confirming an energy efficiency gap. We deduced that there are more consumers with a very low IDR in the loss frame than in the gain frame. Hence, it will be possible to reduce the energy efficiency investment gap and encourage consumers to voluntarily invest in energy efficiency through message framing nudging via consumption efficiency appliance labels.