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Limited Attention and the Residential Energy Efficiency Gap

Author

Listed:
  • Karen Palmer
  • Margaret Walls

Abstract

Inattention may be an important contributor to the energy efficiency gap and may be particularly acute in residential buildings where many different features will determine a home's energy use. Energy audits can provide information on how to reduce energy loss in a home, but the use of audits is rare. We use data from a national survey of 1700 homeowners to study the factors affecting a home owner's choice to have an audit. We create an index of energy inattention for our survey respondents. This index and two additional behavioral factors prove to be important determinants of the audit choice.

Suggested Citation

  • Karen Palmer & Margaret Walls, 2015. "Limited Attention and the Residential Energy Efficiency Gap," American Economic Review, American Economic Association, vol. 105(5), pages 192-195, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:192-95
    Note: DOI: 10.1257/aer.p20151009
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    Citations

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    Cited by:

    1. Chlond, Bettina & Gavard, Claire & Jeuck, Lisa, 2021. "Supporting residential energy conservation under constrained public budget: Cost-effectiveness and redistribution analysis of public financial schemes in France," ZEW Discussion Papers 21-056, ZEW - Leibniz Centre for European Economic Research.
    2. Vesterberg, Mattias, 2017. "The effect of price on electricity contract choice," Umeå Economic Studies 941, Umeå University, Department of Economics.
    3. Vesterberg, Mattias, 2018. "The effect of price on electricity contract choice," Energy Economics, Elsevier, vol. 69(C), pages 59-70.
    4. Ossokina, Ioulia V. & Kerperien, Stephan & Arentze, Theo A., 2021. "Does information encourage or discourage tenants to accept energy retrofitting of homes?," Energy Economics, Elsevier, vol. 103(C).
    5. Bettina Chlond & Claire Gavard & Lisa Jeuck, 2023. "How to Support Residential Energy Conservation Cost-Effectively? An analysis of Public Financial Schemes in France," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(1), pages 29-63, May.
    6. Andersen, Kristoffer Steen & Wiese, Catharina & Petrovic, Stefan & McKenna, Russell, 2020. "Exploring the role of households’ hurdle rates and demand elasticities in meeting Danish energy-savings target," Energy Policy, Elsevier, vol. 146(C).
    7. Cali Curley & Galib Rustamov & Nicky Harrison & Madeline Venable, 2020. "Susceptibility to Inattention: Unpacking Who is Susceptible to Inattention in Energy‐Based Electronic Billing," Review of Policy Research, Policy Studies Organization, vol. 37(6), pages 744-764, November.
    8. Laura Abrardi, 2019. "Behavioral barriers and the energy efficiency gap: a survey of the literature," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(1), pages 25-43, March.
    9. Burlinson, Andrew & Giulietti, Monica & Battisti, Giuliana, 2018. "Technology adoption, consumer inattention and heuristic decision-making: Evidence from a UK district heating scheme," Research Policy, Elsevier, vol. 47(10), pages 1873-1886.
    10. Broberg, Thomas & Kažukauskas, Andrius, 2021. "Information policies and biased cost perceptions - The case of Swedish residential energy consumption," Energy Policy, Elsevier, vol. 149(C).
    11. Brent, Daniel A. & Ward, Michael B., 2019. "Price perceptions in water demand," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    12. Kazukauskas, Andrius & Broberg, Thomas, 2016. "Perceptions and inattention in private electricity consumption," CERE Working Papers 2016:2, CERE - the Center for Environmental and Resource Economics, revised 03 Oct 2023.
    13. Palmer, Karen & Walls, Margaret & O'Keeffe, Lucy, "undated". "Putting Information into Action: What Explains Follow-up on Home Energy Audits?," RFF Working Paper Series dp-15-34, Resources for the Future.
    14. Gillingham, Kenneth & Tsvetanov, Tsvetan, 2018. "Nudging energy efficiency audits: Evidence from a field experiment," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 303-316.
    15. Holladay, Scott & LaRiviere, Jacob & Novgorodsky, David & Price, Michael, 2019. "Prices versus nudges: What matters for search versus purchase of energy investments?," Journal of Public Economics, Elsevier, vol. 172(C), pages 151-173.
    16. Lang, Corey & Qiu, Yueming (Lucy) & Dong, Luran, 2023. "Increasing voluntary enrollment in time-of-use electricity rates: Findings from a survey experiment," Energy Policy, Elsevier, vol. 173(C).
    17. Gilbert, Ben & LaRiviere, Jacob & Novan, Kevin, 2022. "Uncertainty and additionality in energy efficiency programs," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    18. J. Scott Holladay & Jacob LaRiviere & David M. Novgorodsky & Michael Price, 2016. "Asymmetric Effects of Non-Pecuniary Signals on Search and Purchase Behavior for Energy-Efficient Durable Goods," NBER Working Papers 22939, National Bureau of Economic Research, Inc.
    19. Comerford, David A. & Lange, Ian & Moro, Mirko, 2018. "Proof of concept that requiring energy labels for dwellings can induce retrofitting," Energy Economics, Elsevier, vol. 69(C), pages 204-212.
    20. Lai, Yuan & Papadopoulos, Sokratis & Fuerst, Franz & Pivo, Gary & Sagi, Jacob & Kontokosta, Constantine E., 2022. "Building retrofit hurdle rates and risk aversion in energy efficiency investments," Applied Energy, Elsevier, vol. 306(PB).

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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