Advanced Search
MyIDEAS: Login to save this paper or follow this series

Nudging Energy Efficiency Behavior: The Role of Information Labels

Contents:

Author Info

  • Richard G. Newell
  • Juha V. Siikamäki

Abstract

We evaluate the effectiveness of energy efficiency labeling in guiding household decisions. Using a carefully designed choice experiment with alternative labels, we disentangle the relative importance of different types of information and intertemporal behavior (i.e., discounting) in guiding energy efficiency behavior. We find that simple information on the economic value of saving energy was the most important element guiding more cost-efficient investments in energy efficiency, with information on physical energy use and carbon emissions having additional but lesser importance. The degree to which the current EnergyGuide label guided cost-efficient decisions depends importantly on the discount rate assumed. Using individual discount rates separately elicited in our study, we find that the current EnergyGuide label came very close to guiding cost-efficient decisions, on average. However, using a uniform five percent discount rate—which was much lower than the average elicited rate—the EnergyGuide label led to choices that result in a one-third undervaluation of energy efficiency. We find that labels that also endorsed a model (with Energy Star) or gave a suggestive grade to a model (EU-style label), encouraged substantially higher energy efficiency. Our results reinforce the centrality of views on intertemporal choice and discounting, both in terms of understanding individual behavior and in guiding policy.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w19224.pdf
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19224.

as in new window
Length:
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:nbr:nberwo:19224

Note: EEE PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Kenneth Gillingham, Matthew Harding, and David Rapson, 2012. "Split Incentives in Residential Energy Consumption," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 2).
  2. Ronald J. Sutherland, 1991. "Market Barriers to Energy-Efficiency Investments," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 3), pages 15-34.
  3. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  4. Newell, Richard & Anderson, Soren, 2002. "Information Programs for Technology Adoption: The Case of Energy-Efficiency Audits," Discussion Papers, Resources For the Future dp-02-58, Resources For the Future.
  5. Gillingham, Kenneth & Newell, Richard G. & Palmer, Karen, 2009. "Energy Efficiency Economics and Policy," Discussion Papers, Resources For the Future dp-09-13, Resources For the Future.
  6. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, Elsevier, vol. 95(9-10), pages 1082-1095, October.
  7. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
  8. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  9. Brownstone, David & Train, Kenneth, 1999. "Forecasting new product penetration with flexible substitution patterns," University of California Transportation Center, Working Papers qt1j6814b3, University of California Transportation Center.
  10. Daniel Feenberg & Jonathan Skinner, 1992. "The Risk and Duration of Catastrophic Health Care Expenditures," NBER Working Papers 4147, National Bureau of Economic Research, Inc.
  11. James M. Sallee, 2013. "Rational Inattention and Energy Efficiency," NBER Working Papers 19545, National Bureau of Economic Research, Inc.
  12. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, SUNY-Oswego, Department of Economics, number emetr2, Spring.
  13. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 26(1), pages 3-28, Winter.
  14. repec:nbr:nberwo:16114 is not listed on IDEAS
  15. Christina M. Fong & Erzo F. P. Luttmer, 2009. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Racial Group Loyalty," American Economic Journal: Applied Economics, American Economic Association, American Economic Association, vol. 1(2), pages 64-87, April.
  16. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, Springer, vol. 2(2), pages 107-127, December.
  17. Stephen J. Decanio & William E. Watkins, 1998. "Investment In Energy Efficiency: Do The Characteristics Of Firms Matter?," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 95-107, February.
  18. Glenn Harrison & Morten Lau & Elisabet Rutstrom & Melonie Williams, 2002. "Estimating individual discount rates in denmark: A field experiment," Artefactual Field Experiments, The Field Experiments Website 00062, The Field Experiments Website.
  19. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1998. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," NBER Working Papers 6437, National Bureau of Economic Research, Inc.
  20. Cairns, John & Van der Pol, Marjon, 1997. "Constant and decreasing timing aversion for saving lives," Social Science & Medicine, Elsevier, Elsevier, vol. 45(11), pages 1653-1659, December.
  21. Train, Kenneth, 1985. "Discount rates in consumers' energy-related decisions: A review of the literature," Energy, Elsevier, Elsevier, vol. 10(12), pages 1243-1253.
  22. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, Elsevier, vol. 95(9), pages 1082-1095.
  23. Metcalf, Gilbert E., 1994. "Economics and rational conservation policy," Energy Policy, Elsevier, Elsevier, vol. 22(10), pages 819-825, October.
  24. Rabin, Matthew & Weizsäcker, Georg, 2007. "Narrow Bracketing and Dominated Choices," IZA Discussion Papers 3040, Institute for the Study of Labor (IZA).
  25. Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, Elsevier, vol. 16(2), pages 91-122, May.
  26. Gillingham, Kenneth & Palmer, Karen, 2013. "Bridging the Energy Efficiency Gap: Insights for Policy from Economic Theory and Empirical Analysis," Discussion Papers, Resources For the Future dp-13-02, Resources For the Future.
  27. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 97(387), pages 666-84, September.
  28. Henry Ruderman & Mark D. Levine & James E. McMahon, 1987. "The Behavior of the Market for Energy Efficiency in Residential Appliances Including Heating and Cooling Equipment," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1), pages 101-124.
  29. Turrentine, Tom & Kurani, Kenneth S, 2007. "Car buyers and fuel economy?," Institute of Transportation Studies, Working Paper Series, Institute of Transportation Studies, UC Davis qt56x845v4, Institute of Transportation Studies, UC Davis.
  30. Ferrini, Silvia & Scarpa, Riccardo, 2007. "Designs with a priori information for nonmarket valuation with choice experiments: A Monte Carlo study," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 342-363, May.
  31. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, Elsevier, vol. 8(3), pages 201-207.
  32. Zsolt Sándor & Michel Wedel, 2002. "Profile Construction in Experimental Choice Designs for Mixed Logit Models," Marketing Science, INFORMS, INFORMS, vol. 21(4), pages 455-475, February.
  33. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
  34. Wahlund, Richard & Gunnarsson, Jonas, 1996. "Mental discounting and financial strategies," Journal of Economic Psychology, Elsevier, Elsevier, vol. 17(6), pages 709-730, December.
  35. Turrentine, Thomas S. & Kurani, Kenneth S., 2007. "Car buyers and fuel economy?," Energy Policy, Elsevier, Elsevier, vol. 35(2), pages 1213-1223, February.
  36. Kessels, Roselinde & Jones, Bradley & Goos, Peter & Vandebroek, Martina, 2009. "An Efficient Algorithm for Constructing Bayesian Optimal Choice Designs," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 27(2), pages 279-291.
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 in new window

Cited by:
  1. Hunt Allcott & Richard Sweeney, 2014. "Information Disclosure through Agents: Evidence from a Field Experiment," NBER Working Papers 20048, National Bureau of Economic Research, Inc.
  2. Massimo Anna Alberini & Massimo Filippini & Markus Bareit, 2014. "Does the Swiss Car Market Reward Fuel Efficient Cars? Evidence from Hedonic Pricing Regressions, Matching and a Regression Discontinuity Design," CER-ETH Economics working paper series 14/190, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  3. John Lynham & Kohei Nitta & Tatsuyoshi Saijo & Nori Tarui, 2014. "Why does real-time information reduce energy consumption?," Working Papers, University of Hawaii at Manoa, Department of Economics 201419, University of Hawaii at Manoa, Department of Economics.
  4. Anna Alberini & Markus Bareit & Massimo Filippini, 2014. "Does the Swiss Car Market Reward Fuel Efficient Cars? Evidence from Hedonic Pricing Regressions, a Regression Discontinuity Design, and Matching," Working Papers, Fondazione Eni Enrico Mattei 2014.16, Fondazione Eni Enrico Mattei.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:19224. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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