IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v132y2017icp14-30.html
   My bibliography  Save this article

The role of risk and trust attitudes in explaining residential energy demand: Evidence from the United Kingdom

Author

Listed:
  • Volland, Benjamin

Abstract

Recent research into the determinants of household energy consumption has aimed to incorporate findings from economics, sociology and psychology in order to obtain a more comprehensive understanding of the factors determining energy demand. The current paper contributes to this nascent stream of literature by studying the relationship between risk attitudes, trust propensity and energy consumption at the household level. Drawing on the British Household Panel Survey, a well-known data set in the context of energy studies, I show that trust is negatively correlated with household energy demand, while higher risk tolerance leads to increases in residential energy use. Potential explanations for these findings are investigated, suggesting that risk preferences may be related with overall appliance stock and the size of the rebound effect.

Suggested Citation

  • Volland, Benjamin, 2017. "The role of risk and trust attitudes in explaining residential energy demand: Evidence from the United Kingdom," Ecological Economics, Elsevier, vol. 132(C), pages 14-30.
    • Handle: RePEc:eee:ecolec:v:132:y:2017:i:c:p:14-30
    DOI: 10.1016/j.ecolecon.2016.10.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800915304365
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2016.10.002?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 look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Meier, Helena & Rehdanz, Katrin, 2010. "Determinants of residential space heating expenditures in Great Britain," Energy Economics, Elsevier, vol. 32(5), pages 949-959, September.
    2. Leth-Petersen, Soren & Togeby, Mikael, 2001. "Demand for space heating in apartment blocks: measuring effects of policy measures aiming at reducing energy consumption," Energy Economics, Elsevier, vol. 23(4), pages 387-403, July.
    3. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    4. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2008. "Representative Trust And Reciprocity: Prevalence And Determinants," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 84-90, January.
    5. Qiu, Yueming & Colson, Gregory & Grebitus, Carola, 2014. "Risk preferences and purchase of energy-efficient technologies in the residential sector," Ecological Economics, Elsevier, vol. 107(C), pages 216-229.
    6. Montizaan, Raymond M. & Vendrik, Maarten C.M., 2014. "Misery Loves Company: Exogenous shocks in retirement expectations and social comparison effects on subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 1-26.
    7. Schuler, Andreas & Weber, Christoph & Fahl, Ulrich, 2000. "Energy consumption for space heating of West-German households: empirical evidence, scenario projections and policy implications," Energy Policy, Elsevier, vol. 28(12), pages 877-894, October.
    8. Erin Baker, 2012. "Option Value and the Diffusion of Energy Efficient Products," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    9. Nesbakken, Runa, 2001. " Energy Consumption for Space Heating: A Discrete-Continuous Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 165-184, March.
    10. Ernst Fehr, 2009. "On The Economics and Biology of Trust," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 235-266, 04-05.
    11. Rehdanz, Katrin, 2007. "Determinants of residential space heating expenditures in Germany," Energy Economics, Elsevier, vol. 29(2), pages 167-182, March.
    12. Pretty, Jules & Ward, Hugh, 2001. "Social Capital and the Environment," World Development, Elsevier, vol. 29(2), pages 209-227, February.
    13. Schröder, Carsten & Rehdanz, Katrin & Narita, Daiju & Okubo, Toshihiro, 2015. "The decline in average family size and its implications for the average benefits of within‐household sharing," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 67(3), pages 760-780.
    14. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    15. Anke Becker & Thomas Deckers & Thomas Dohmen & Armin Falk & Fabian Kosse, 2012. "The Relationship Between Economic Preferences and Psychological Personality Measures," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 453-478, July.
    16. Christopher D. Carroll & Wendy E. Dunn, 1997. "Unemployment Expectations, Jumping (S,s) Triggers, and Household Balance Sheets," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 165-230, National Bureau of Economic Research, Inc.
    17. Philomena Bacon & Anna Conte & Peter Moffatt, 2014. "Assortative mating on risk attitude," Theory and Decision, Springer, vol. 77(3), pages 389-401, October.
    18. Ada Ferrer-i-Carbonell & Jeroen van den Bergh, 2004. "A Micro-Econometric Analysis of Determinants of Unsustainable Consumption in The Netherlands," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(4), pages 367-389, April.
    19. Farsi, Mehdi, 2010. "Risk aversion and willingness to pay for energy efficient systems in rental apartments," Energy Policy, Elsevier, vol. 38(6), pages 3078-3088, June.
    20. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
    21. Severin Borenstein, 2014. "A Microeconomic Framework for Evaluating Energy Efficiency Rebound and Some Implications," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    22. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    23. Lange, Ian & Moro, Mirko & Traynor, Laura, 2014. "Green hypocrisy?: Environmental attitudes and residential space heating expenditure," Ecological Economics, Elsevier, vol. 107(C), pages 76-83.
    24. Elinor Ostrom, 2014. "A Polycentric Approach For Coping With Climate Change," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 97-134, May.
    25. Torgler Benno & Frey Bruno S. & Wilson Clevo, 2009. "Environmental and Pro-Social Norms: Evidence on Littering," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-41, April.
    26. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    27. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    28. Sapci, Onur & Considine, Timothy, 2014. "The link between environmental attitudes and energy consumption behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 52(C), pages 29-34.
    29. Binswanger, Mathias, 2001. "Technological progress and sustainable development: what about the rebound effect?," Ecological Economics, Elsevier, vol. 36(1), pages 119-132, January.
    30. Iris Bohnet & Fiona Greig & Benedikt Herrmann & Richard Zeckhauser, 2008. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States," American Economic Review, American Economic Association, vol. 98(1), pages 294-310, March.
    31. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2012. "The Intergenerational Transmission of Risk and Trust Attitudes," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 645-677.
    32. Gachter, Simon & Herrmann, Benedikt & Thoni, Christian, 2004. "Trust, voluntary cooperation, and socio-economic background: survey and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 505-531, December.
    33. Nesbakken, Runa, 1999. "Price sensitivity of residential energy consumption in Norway," Energy Economics, Elsevier, vol. 21(6), pages 493-515, December.
    34. van den Bergh, Jeroen C.J.M., 2008. "Environmental regulation of households: An empirical review of economic and psychological factors," Ecological Economics, Elsevier, vol. 66(4), pages 559-574, July.
    35. repec:fth:jonhop:386 is not listed on IDEAS
    36. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer;Economic Science Association, vol. 9(3), pages 193-208, September.
    37. Wendy E. Dunn, 1998. "Unemployment risk, precautionary saving, and durable goods purchase decisions," Finance and Economics Discussion Series 1998-49, Board of Governors of the Federal Reserve System (U.S.).
    38. Kotchen, Matthew J. & Moore, Michael R., 2007. "Private provision of environmental public goods: Household participation in green-electricity programs," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 1-16, January.
    39. Chitnis, Mona & Sorrell, Steve & Druckman, Angela & Firth, Steven K. & Jackson, Tim, 2014. "Who rebounds most? Estimating direct and indirect rebound effects for different UK socioeconomic groups," Ecological Economics, Elsevier, vol. 106(C), pages 12-32.
    40. Abrahamse, Wokje & Steg, Linda, 2009. "How do socio-demographic and psychological factors relate to households' direct and indirect energy use and savings?," Journal of Economic Psychology, Elsevier, vol. 30(5), pages 711-720, October.
    41. Shaw, Kathryn L, 1996. "An Empirical Analysis of Risk Aversion and Income Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 626-653, October.
    42. Alcott, Blake, 2005. "Jevons' paradox," Ecological Economics, Elsevier, vol. 54(1), pages 9-21, July.
    Full references (including those not matched with items on IDEAS)

    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. Ivan Tilov & Benjamin Volland & Mehdi Farsi, 2017. "Interactions in Swiss Households' Energy Demand: A Holistic Approach," IRENE Working Papers 17-11, IRENE Institute of Economic Research.
    2. Hendrik Schmitz & Reinhard Madlener, 2020. "Heterogeneity in price responsiveness for residential space heating in Germany," Empirical Economics, Springer, vol. 59(5), pages 2255-2281, November.
    3. Tilov, Ivan & Farsi, Mehdi & Volland, Benjamin, 2019. "Interactions in Swiss households’ energy demand: A holistic approach," Energy Policy, Elsevier, vol. 128(C), pages 136-149.
    4. Lange, Ian & Moro, Mirko & Traynor, Laura, 2014. "Green hypocrisy?: Environmental attitudes and residential space heating expenditure," Ecological Economics, Elsevier, vol. 107(C), pages 76-83.
    5. Giuseppe Albanese & Guido de Blasio & Paolo Sestito, 2017. "Trust, risk and time preferences: evidence from survey data," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(4), pages 367-388, December.
    6. Groh, Elke D. & Ziegler, Andreas, 2022. "On the relevance of values, norms, and economic preferences for electricity consumption," Ecological Economics, Elsevier, vol. 192(C).
    7. Giuseppe Albanese & Guido de Blasio & Paolo Sestito, 2013. "Trust and preferences: evidence from survey data," Temi di discussione (Economic working papers) 911, Bank of Italy, Economic Research and International Relations Area.
    8. Elke D. Groh & Andreas Ziegler, 2021. "On the relevance of values, norms, and economic preferences for electricity consumption," MAGKS Papers on Economics 202107, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Kenichi Mizobuchi & Kenji Takeuchi, 2015. "Replacement or Additional Purchase: The Impact of Energy-Efficient Appliances on Household Electricity Saving," Discussion Papers 1520, Graduate School of Economics, Kobe University.
    10. Groh, Elke D. & Ziegler, Andreas, 2020. "On the relevance of economic preferences, values, norms, and socio-demographics for electricity consumption," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224587, Verein für Socialpolitik / German Economic Association.
    11. Dorothee Charlier and Sondes Kahouli, 2019. "From Residential Energy Demand to Fuel Poverty: Income-induced Non-linearities in the Reactions of Households to Energy Price Fluctuations," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    12. Meier, Helena & Rehdanz, Katrin, 2010. "Determinants of residential space heating expenditures in Great Britain," Energy Economics, Elsevier, vol. 32(5), pages 949-959, September.
    13. Jan-Erik Loennqvist & Markku Verkasalo & Gari Walkowitz & Philipp C. Wichardt, 2011. "Measuring Individual Risk Attitudes in the Lab: Task or Ask? An Empirical Comparison," Cologne Graduate School Working Paper Series 02-03, Cologne Graduate School in Management, Economics and Social Sciences.
    14. Lönnqvist, Jan-Erik & Verkasalo, Markku & Walkowitz, Gari & Wichardt, Philipp C., 2015. "Measuring individual risk attitudes in the lab: Task or ask? An empirical comparison," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 254-266.
    15. Quang Nguyen & Marie Claire Villeval & Hui Xu, 2012. "Trust and Trustworthiness under the Prospect Theory: A field experiment in Vietnam," Working Papers halshs-00730609, HAL.
    16. Anna Risch & Claire Salmon, 2017. "What matters in residential energy consumption: evidence from France," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 40(1/2), pages 79-116.
    17. Wang, Xia & Ding, Chao & Zhou, Mao & Cai, Weiguang & Ma, Xianrui & Yuan, Jiachen, 2023. "Assessment of space heating consumption efficiency based on a household survey in the hot summer and cold winter climate zone in China," Energy, Elsevier, vol. 274(C).
    18. Dorothée Charlier & Bérangère Legendre, 2020. "Carbon Dioxide Emissions and aging: Disentangling behavior from energy efficiency," Working Papers 2020.13, FAERE - French Association of Environmental and Resource Economists.
    19. Claudy, Marius & Michelsen, Claus, 2016. "Housing Market Fundamentals, Housing Quality and Energy Consumption: Evidence from Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 37(4), pages 25-43.
    20. Dorothée CHARLIER & Mouez FODHA & Djamel KIRAT, 2021. "CO2 Emissions from the Residential Sector in Europe: Some Insights form a Country-Level Assessment," LEO Working Papers / DR LEO 2849, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.

    More about this item

    Keywords

    Risk attitudes; Trust; Energy expenditures; BHPS; UK households;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

    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:ecolec:v:132:y:2017:i:c:p:14-30. 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/ecolecon .

    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.