IDEAS home Printed from https://ideas.repec.org/p/cec/wpaper/1809.html
   My bibliography  Save this paper

Green, yellow or red lemons? Artefactual field experiment on houses energy labels perception

Author

Listed:
  • Edouard Civel
  • Nathaly Cruz

Abstract

Labels are increasingly popular among policy-makers, companies and NGOs to improve consumers’ awareness, especially about environmental footprints. Yet, the efficiency of these informational tools is mostly looked as their ability to shift behaviors, whereas their first goal is to enable people to discriminate labelled goods. This paper studies how the complex information displayed by houses’ Energy Performance Certificates is processed by real economic agents. Through a randomized artefactual field experiment on 3,000 French subjects, we test the impact of these labels on people’s perception of a home energy performance. Results evidence that 24% of subjects did not pay attention to the energy label. Unexpectedly, we find out that gender is the most critical socio-demographic characteristic in this changing attention. We interpret this effect by the Selectivity Hypothesis: energy labels design engages more male subjects. Among attentive subjects, energy labels’ efficiency to transmit information is mixed. Subjects do identify separately each label’s grade, but their judgment is biased by prior beliefs and blurred by idiosyncratic features. Aggregated reading is Bayesian: subjects infer the label information to revise their belief on energy quality. Moreover, our results shed light on strong asymmetries. While worsening grades induce decreasing judgments on energy quality, top level quality label seems to undergo skepticism, intensifying idiosyncratic noise.

Suggested Citation

  • Edouard Civel & Nathaly Cruz, 2018. "Green, yellow or red lemons? Artefactual field experiment on houses energy labels perception," Working Papers 1809, Chaire Economie du climat.
  • Handle: RePEc:cec:wpaper:1809
    as

    Download full text from publisher

    File URL: http://www.chaireeconomieduclimat.org/RePEc/cec/wpaper/18-11-21-Cahier-R-2018-09-Civel-Cruz.pdf
    File Function: First version, 2018
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ben Youssef Adel & Abderrazak Chema, 2009. "Multiplicity of Eco-Labels, Competition, and the Environment," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-24, December.
    2. Panzone, Luca & Hilton, Denis & Sale, Laura & Cohen, Doron, 2016. "Socio-demographics, implicit attitudes, explicit attitudes, and sustainable consumption in supermarket shopping," Journal of Economic Psychology, Elsevier, vol. 55(C), pages 77-95.
    3. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    4. Cason, Timothy N. & Gangadharan, Lata, 2002. "Environmental Labeling and Incomplete Consumer Information in Laboratory Markets," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 113-134, January.
    5. Collado, Rocío Román & Díaz, María Teresa Sanz, 2017. "Analysis of energy end-use efficiency policy in Spain," Energy Policy, Elsevier, vol. 101(C), pages 436-446.
    6. Laurent Muller & M. Prevost, 2016. "What cognitive sciences have to say about the impacts of nutritional labelling formats," Post-Print hal-01349185, HAL.
    7. Meyers-Levy, Joan & Maheswaran, Durairaj, 1991. " Exploring Differences in Males' and Females' Processing Strategies," Journal of Consumer Research, Oxford University Press, vol. 18(1), pages 63-70, June.
    8. Laurent Muller & Marie Prevost, 2016. "What cognitive sciences have to say about the impacts of nutritional labelling formats," Post-Print hal-01306124, HAL.
    9. Shewmake, Sharon & Okrent, Abigail & Thabrew, Lanka & Vandenbergh, Michael, 2015. "Predicting consumer demand responses to carbon labels," Ecological Economics, Elsevier, vol. 119(C), pages 168-180.
    10. Nicola Lacetera & Devin G. Pope & Justin R. Sydnor, 2012. "Heuristic Thinking and Limited Attention in the Car Market," American Economic Review, American Economic Association, vol. 102(5), pages 2206-2236, August.
    11. Patricia Espinheira & Silvia Ferrari & Francisco Cribari-Neto, 2008. "On beta regression residuals," Journal of Applied Statistics, Taylor & Francis Journals, vol. 35(4), pages 407-419.
    12. Franz Fuerst & Patrick McAllister, 2011. "Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office Values," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(1), pages 45-69, March.
    13. Hyland, Marie & Lyons, Ronan C. & Lyons, Seán, 2013. "The value of domestic building energy efficiency — evidence from Ireland," Energy Economics, Elsevier, vol. 40(C), pages 943-952.
    14. Muller, L. & Prevost, M., 2016. "What cognitive sciences have to say about the impacts of nutritional labelling formats," Journal of Economic Psychology, Elsevier, vol. 55(C), pages 17-29.
    15. Silvia Ferrari & Francisco Cribari-Neto, 2004. "Beta Regression for Modelling Rates and Proportions," Journal of Applied Statistics, Taylor & Francis Journals, vol. 31(7), pages 799-815.
    16. Simas, Alexandre B. & Barreto-Souza, Wagner & Rocha, Andréa V., 2010. "Improved estimators for a general class of beta regression models," Computational Statistics & Data Analysis, Elsevier, vol. 54(2), pages 348-366, February.
    17. Soham Baksi & Pinaki Bose & Di Xiang, 2017. "Credence Goods, Misleading Labels, and Quality Differentiation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 377-396, October.
    18. Santos, Rui & Antunes, Paula & Baptista, Gualter & Mateus, Pedro & Madruga, Luisa, 2006. "Stakeholder participation in the design of environmental policy mixes," Ecological Economics, Elsevier, vol. 60(1), pages 100-110, November.
    19. Kahn, Matthew E. & Kok, Nils, 2014. "The capitalization of green labels in the California housing market," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 25-34.
    20. Fuerst, Franz & McAllister, Patrick & Nanda, Anupam & Wyatt, Peter, 2015. "Does energy efficiency matter to home-buyers? An investigation of EPC ratings and transaction prices in England," Energy Economics, Elsevier, vol. 48(C), pages 145-156.
    21. Brécard, Dorothée & Hlaimi, Boubaker & Lucas, Sterenn & Perraudeau, Yves & Salladarré, Frédéric, 2009. "Determinants of demand for green products: An application to eco-label demand for fish in Europe," Ecological Economics, Elsevier, vol. 69(1), pages 115-125, November.
    22. Miquel, María-José & Caplliure, Eva-María & Pérez, Carmen & Bigné, Enrique, 2017. "Buying private label in durables: Gender and other psychological variables," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 349-357.
    23. Laura Enax & Ian Krajbich & Bernd Weber, 2016. "Salient nutrition labels increase the integration of health attributes in food decision-making," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(5), pages 460-471, September.
    24. 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.
    25. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    26. Olsen, Marvin E., 1983. "Public acceptance of consumer energy conservation strategies," Journal of Economic Psychology, Elsevier, vol. 4(1-2), pages 183-196, October.
    27. 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.
    28. Miller, Gabrielle F. & Gupta, Sonam & Kropp, Jaclyn D. & Grogan, Kelly A. & Mathews, Anne, 2016. "The effects of pre-ordering and behavioral nudges on National School Lunch Program participants’ food item selection," Journal of Economic Psychology, Elsevier, vol. 55(C), pages 4-16.
    29. 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.
    30. Verplanken, Bas & Weenig, Mieneke W. H., 1993. "Graphical energy labels and consumers' decisions about home appliances: A process tracing approach," Journal of Economic Psychology, Elsevier, vol. 14(4), pages 739-752, December.
    31. Santarius, Tilman & Soland, Martin, 2018. "How Technological Efficiency Improvements Change Consumer Preferences: Towards a Psychological Theory of Rebound Effects," Ecological Economics, Elsevier, vol. 146(C), pages 414-424.
    32. Cribari-Neto, Francisco & Zeileis, Achim, 2010. "Beta Regression in R," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 34(i02).
    33. Teisl, Mario F. & Rubin, Jonathan & Noblet, Caroline L., 2008. "Non-dirty dancing? Interactions between eco-labels and consumers," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 140-159, April.
    34. Andor, Mark & Gerster, Andreas & Sommer, Stephan, 2017. "Consumer inattention, heuristic thinking and the role of energy labels," Ruhr Economic Papers 671, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    35. Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy-efficiency gap What does it mean?," Energy Policy, Elsevier, vol. 22(10), pages 804-810, October.
    36. Brounen, Dirk & Kok, Nils, 2011. "On the economics of energy labels in the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 166-179, September.
    37. repec:bla:randje:v:49:y:2018:i:2:p:453-477 is not listed on IDEAS
    38. Crosetto, Paolo & Muller, Laurent & Ruffieux, Bernard, 2016. "Helping consumers with a front-of-pack label: Numbers or colors?," Journal of Economic Psychology, Elsevier, vol. 55(C), pages 30-50.
    39. Sardianou, Eleni, 2007. "Estimating energy conservation patterns of Greek households," Energy Policy, Elsevier, vol. 35(7), pages 3778-3791, July.
    40. Steiner, B.E. & Peschel, A.O. & Grebitus, C., 2017. "Multi-Product Category Choices Labeled for Ecological Footprints: Exploring Psychographics and Evolved Psychological Biases for Characterizing Latent Consumer Classes," Ecological Economics, Elsevier, vol. 140(C), pages 251-264.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Information treatment; Experimental economics; Cognitive psychology; Green Value; Energy efficiency;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cec:wpaper:1809. 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: (Chaire Economie du Climat). General contact details of provider: http://www.chaireeconomieduclimat.org .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.