IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v114y2022ics0140988322004133.html
   My bibliography  Save this article

Energy labels and heuristic decision-making: The role of cognition and energy literacy

Author

Listed:
  • He, Shutong
  • Blasch, Julia
  • van Beukering, Pieter
  • Wang, Junfeng

Abstract

Energy labels are used worldwide to overcome the inefficiency in household energy use. Presenting energy efficiency in grade-like categories has been found to induce heuristic decision-making, known as the “class valuation effect”. This study investigates whether visualising energy efficiency using a continuous-scale label increases consumers’ consciousness when purchasing appliances. We examine this question in an online survey with randomised decision tasks conducted in China and the Netherlands. In the Dutch sample, the effectiveness of continuous-scale labels depends on individuals’ holistic cognitive tendency and the type of comparison they are faced with, whereas the Chinese sample is not sensitive to these moderators. Moreover, energy literacy shows mixed influence on individual decisions. Results suggest that representing energy efficiency on continuous scales can be used as supportive visual information to facilitate purchase decisions. Regarding energy education, knowledge that directly links to daily energy use seems to translate well into consumers’ conscious decisions.

Suggested Citation

  • He, Shutong & Blasch, Julia & van Beukering, Pieter & Wang, Junfeng, 2022. "Energy labels and heuristic decision-making: The role of cognition and energy literacy," Energy Economics, Elsevier, vol. 114(C).
    • Handle: RePEc:eee:eneeco:v:114:y:2022:i:c:s0140988322004133
    DOI: 10.1016/j.eneco.2022.106279
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988322004133
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2022.106279?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    2. Brent, Daniel A. & Ward, Michael B., 2018. "Energy efficiency and financial literacy," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 181-216.
    3. Zha, Donglan & Yang, Guanglei & Wang, Wenzhong & Wang, Qunwei & Zhou, Dequn, 2020. "Appliance energy labels and consumer heterogeneity: A latent class approach based on a discrete choice experiment in China," Energy Economics, Elsevier, vol. 90(C).
    4. Manisha Jain, Anand B. Rao, and Anand Patwardhan, 2021. "Energy Cost Information and Consumer Decisions: Results from a Choice Experiment on Refrigerator Purchases in India," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 253-272.
    5. Frederiks, Elisha R. & Stenner, Karen & Hobman, Elizabeth V., 2015. "Household energy use: Applying behavioural economics to understand consumer decision-making and behaviour," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1385-1394.
    6. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 3-28, Winter.
    7. Min, Jihoon & Azevedo, Inês L. & Michalek, Jeremy & de Bruin, Wändi Bruine, 2014. "Labeling energy cost on light bulbs lowers implicit discount rates," Ecological Economics, Elsevier, vol. 97(C), pages 42-50.
    8. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
    9. Hori, Shiro & Kondo, Kayoko & Nogata, Daisuke & Ben, Han, 2013. "The determinants of household energy-saving behavior: Survey and comparison in five major Asian cities," Energy Policy, Elsevier, vol. 52(C), pages 354-362.
    10. Mark A. Andor, Andreas Gerster, and Stephan Sommer, 2020. "Consumer Inattention, Heuristic Thinking and the Role of Energy Labels," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    11. Richard G. Newell & Juha Siikamäki, 2014. "Nudging Energy Efficiency Behavior: The Role of Information Labels," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 555-598.
    12. Anderson, C Dennis & Claxton, John D, 1982. "Barriers to Consumer Choice of Energy Efficient Products," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(2), pages 163-170, September.
    13. Anna Alberini, Markus Bareit and Massimo Filippini, 2016. "What is the Effect of Fuel Efficiency Information on Car Prices? Evidence from Switzerland," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    14. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    15. Schleich, Joachim & Durand, Antoine & Brugger, Heike, 2021. "How effective are EU minimum energy performance standards and energy labels for cold appliances?," Energy Policy, Elsevier, vol. 149(C).
    16. Blasch, Julia & Filippini, Massimo & Kumar, Nilkanth, 2019. "Boundedly rational consumers, energy and investment literacy, and the display of information on household appliances," Resource and Energy Economics, Elsevier, vol. 56(C), pages 39-58.
    17. Stadelmann, Marcel & Schubert, Renate, 2018. "How Do Different Designs of Energy Labels Influence Purchases of Household Appliances? A Field Study in Switzerland," Ecological Economics, Elsevier, vol. 144(C), pages 112-123.
    18. Alokparna Basu Monga & Deborah Roedder John, 2007. "Cultural Differences in Brand Extension Evaluation: The Influence of Analytic versus Holistic Thinking," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 33(4), pages 529-536, December.
    19. Rodolfo Sejas-Portillo & David Comerford & Mirko Moro & Till Stowasser, 2020. "Limited Attention in the Housing Market: Threshold Effects of Energy-Performance Certificates on Property Prices and Energy-Efficiency Investments," CESifo Working Paper Series 8669, CESifo.
    20. DeWaters, Jan E. & Powers, Susan E., 2011. "Energy literacy of secondary students in New York State (USA): A measure of knowledge, affect, and behavior," Energy Policy, Elsevier, vol. 39(3), pages 1699-1710, March.
    21. Alokparna (Sonia) Basu Monga & Deborah Roedder John, 2008. "WHEN DOES NEGATIVE BRAND PUBLICITY HURT? The Moderating Influence of Analytic Versus Holistic Thinking," Working Papers 0044, College of Business, University of Texas at San Antonio.
    22. Stefanie Heinzle, 2012. "Disclosure of Energy Operating Cost Information: A Silver Bullet for Overcoming the Energy-Efficiency Gap?," Journal of Consumer Policy, Springer, vol. 35(1), pages 43-64, March.
    23. Giovanna d’Adda & Yu Gao & Massimo Tavoni, 2022. "A randomized trial of energy cost information provision alongside energy-efficiency classes for refrigerator purchases," Nature Energy, Nature, vol. 7(4), pages 360-368, April.
    24. Ma, Ke & Chen, Tong & Zheng, Chundong, 2018. "Influence of thinking style and attribution on consumer response to online stockouts," Journal of Retailing and Consumer Services, Elsevier, vol. 43(C), pages 218-225.
    25. Cristiano Codagnone & Giuseppe Alessandro Veltri & Francesco Bogliacino & Francisco Lupiáñez-Villanueva & George Gaskell & Andriy Ivchenko & Pietro Ortoleva & Francesco Mureddu, 2016. "Labels as nudges? An experimental study of car eco-labels," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(3), pages 403-432, December.
    26. Andor, Mark A. & Frondel, Manuel & Gerster, Andreas & Sommer, Stephan, 2019. "Cognitive reflection and the valuation of energy efficiency," Energy Economics, Elsevier, vol. 84(S1).
    27. Brounen, Dirk & Kok, Nils & Quigley, John M., 2013. "Energy literacy, awareness, and conservation behavior of residential households," Energy Economics, Elsevier, vol. 38(C), pages 42-50.
    28. Steffen Kallbekken & Håkon Sælen & Erlend Hermansen, 2013. "Bridging the Energy Efficiency Gap: A Field Experiment on Lifetime Energy Costs and Household Appliances," Journal of Consumer Policy, Springer, vol. 36(1), pages 1-16, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhiyu Lv & Xu Zhang, 2023. "Influencing Factor Analysis on Energy-Saving Refrigerator Purchases from the Supply and Demand Sides," Sustainability, MDPI, vol. 15(13), pages 1-16, June.
    2. Yingnan Cong & Yufei Hou & Jiaming Jiang & Shuangzi Chen & Xiaojing Cai, 2023. "Features and Evolution of Global Energy Trade Patterns from the Perspective of Complex Networks," Energies, MDPI, vol. 16(15), pages 1-17, July.
    3. Mitsutsugu Hamamoto, 2023. "Estimating consumers’ discount rates in energy-saving investment decisions: a comparison of revealed and stated approaches," SN Business & Economics, Springer, vol. 3(7), pages 1-19, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. He, Shutong & Blasch, Julia & van Beukering, Pieter, 2022. "How does information on environmental emissions influence appliance choice? The role of values and perceived environmental impacts," Energy Policy, Elsevier, vol. 168(C).
    2. E. Denny, 2022. "Long-term Energy Cost Labelling for Appliances: Evidence from a Randomised Controlled Trial in Ireland," Journal of Consumer Policy, Springer, vol. 45(3), pages 369-409, September.
    3. Stadelmann, Marcel & Schubert, Renate, 2018. "How Do Different Designs of Energy Labels Influence Purchases of Household Appliances? A Field Study in Switzerland," Ecological Economics, Elsevier, vol. 144(C), pages 112-123.
    4. Samdruk Dharshing & Stefanie Lena Hille, 2017. "The Energy Paradox Revisited: Analyzing the Role of Individual Differences and Framing Effects in Information Perception," Journal of Consumer Policy, Springer, vol. 40(4), pages 485-508, December.
    5. Mitsutsugu Hamamoto, 2023. "Estimating consumers’ discount rates in energy-saving investment decisions: a comparison of revealed and stated approaches," SN Business & Economics, Springer, vol. 3(7), pages 1-19, July.
    6. Blasch, Julia & Filippini, Massimo & Kumar, Nilkanth, 2019. "Boundedly rational consumers, energy and investment literacy, and the display of information on household appliances," Resource and Energy Economics, Elsevier, vol. 56(C), pages 39-58.
    7. Olsthoorn, Mark & Schleich, Joachim & Guetlein, Marie-Charlotte & Durand, Antoine & Faure, Corinne, 2023. "Beyond energy efficiency: Do consumers care about life-cycle properties of household appliances?," Energy Policy, Elsevier, vol. 174(C).
    8. Panu Kalmi & Gianluca Trotta & Andrius Kažukauskas, 2021. "Energy‐related financial literacy and electricity consumption: Survey‐based evidence from Finland," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(3), pages 1062-1089, September.
    9. James Carroll & Eleanor Denny & Ronan C. Lyons, 2020. "Better energy cost information changes household property investment decisions: Evidence from a nationwide experiment," Trinity Economics Papers tep1520, Trinity College Dublin, Department of Economics.
    10. Amaia de Ayala & María del Mar Solà, 2022. "Assessing the EU Energy Efficiency Label for Appliances: Issues, Potential Improvements and Challenges," Energies, MDPI, vol. 15(12), pages 1-25, June.
    11. Julia Blasch & Claudio Daminato, 2018. "Behavioral anomalies and energy-related individual choices: the role of status-quo bias," CER-ETH Economics working paper series 18/300, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    12. Andor, Mark A. & Frondel, Manuel & Gerster, Andreas & Sommer, Stephan, 2019. "Cognitive reflection and the valuation of energy efficiency," Energy Economics, Elsevier, vol. 84(S1).
    13. Stefano Ceolotto & Eleanor Denny, 2021. "Putting a new 'spin' on energy labels: measuring the impact of reframing energy efficiency on tumble dryer choices in a multi-country experiment," Trinity Economics Papers tep1521, Trinity College Dublin, Department of Economics.
    14. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    15. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Working Papers 2018.07, FAERE - French Association of Environmental and Resource Economists.
    16. Schleich, Joachim & Durand, Antoine & Brugger, Heike, 2021. "How effective are EU minimum energy performance standards and energy labels for cold appliances?," Energy Policy, Elsevier, vol. 149(C).
    17. Sahari, Anna, 2019. "Electricity prices and consumers’ long-term technology choices: Evidence from heating investments," European Economic Review, Elsevier, vol. 114(C), pages 19-53.
    18. Blasch, Julia & Boogen, Nina & Filippini, Massimo & Kumar, Nilkanth, 2017. "Explaining electricity demand and the role of energy and investment literacy on end-use efficiency of Swiss households," Energy Economics, Elsevier, vol. 68(S1), pages 89-102.
    19. Faure, Corinne & Guetlein, Marie-Charlotte & Schleich, Joachim, 2021. "Effects of rescaling the EU energy label on household preferences for top-rated appliances," Energy Policy, Elsevier, vol. 156(C).
    20. 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).

    More about this item

    Keywords

    Energy label; Household decision-making; Heuristics; Cognitive style; Energy literacy;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:114:y:2022:i:c:s0140988322004133. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.