Cognitive bias can depend on eco-label design: Evidence from a negative footprint illusion in energy labeled household appliances

Eco-labeling is the main policy instrument to communicate products' energy efficiency and environmental diagnosticity to consumers. Eco-labels can be graded, such as the European Union's (EU) new ecodesign scale (with energy classes A, B, C, D, E, F, G) or the EU's old ecodesign scale (with energy classes A+++, A++, A+, A, B, C, D). Whether one scale is superior to the other in its effect on consumers is debated. The new scale tends to be understood as a linear interval scale, whereas the old scale tends to be perceived as skewed. We contribute to this debate by taking the novel approach of investigating how linear and skewed eco-labels elicit cognitive biases in consumers. We found that consumers perceive the energy demand (Experiment 1) and carbon footprint (Experiment 2) of a bundle containing an appliance with an intermediate energy class and an appliance with an excellent energy class to be lower than the energy demand/carbon footprint of the appliance with the intermediate energy class alone—a negative footprint illusion. A distortion of the mental organization of eco-labels (Experiment 2) showed that the magnitude of the negative footprint illusion depends dynamically on how eco-labels are organized in mental space, sometimes resulting in a greater effect with the skewed scale and sometimes a greater effect with the linear scale. The results stress the importance of communicating the energy efficiency of individual eco-label classes, as well as how their relation to other eco-label classes should be understood, to mitigate cognitive biases.