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Deconstructing the Energy-Efficiency Gap: Conceptual Frameworks and Evidence

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  • Todd Gerarden
  • Richard G. Newell
  • Robert N. Stavins

Abstract

Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but these technologies appear not to be adopted to the degree that appears justified, even on a purely private basis. We present two complementary frameworks for understanding this so-called "energy paradox" or "energy efficiency gap." First, we build upon previous literature by dividing potential explanations for the energy efficiency gap into three categories: market failures, behavioral anomalies, and model and measurement errors. Second, we examine the elements of cost-minimizing energy efficiency decisions, the typical benchmark used in assessing the gap's magnitude.

Suggested Citation

  • Todd Gerarden & Richard G. Newell & Robert N. Stavins, 2015. "Deconstructing the Energy-Efficiency Gap: Conceptual Frameworks and Evidence," American Economic Review, American Economic Association, vol. 105(5), pages 183-186, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:183-86
    Note: DOI: 10.1257/aer.p20151012
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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