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The role of energy and investment literacy for residential electricity demand and end-use efficiency

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This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the generalized true random effects model (GTREM). A panel dataset of 1, 994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to improve efficiency in the use of energy within households.

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  • Julia Blasch & Nina Boogen & Nilkanth Kumar & Massimo Filippini, 2017. "The role of energy and investment literacy for residential electricity demand and end-use efficiency," CER-ETH Economics working paper series 17/269, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  • Handle: RePEc:eth:wpswif:17-269
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    Cited by:

    1. Benjamin Volland & Ivan Tilov, 2018. "Price elasticities of electricity demand in Switzerland: Results from a household panel," IRENE Working Papers 18-03, IRENE Institute of Economic Research.
    2. Trotta, Gianluca, 2018. "Factors affecting energy-saving behaviours and energy efficiency investments in British households," Energy Policy, Elsevier, vol. 114(C), pages 529-539.
    3. Werthschulte, Madeline & Löschel, Andreas, 2019. "Cost misperceptions and energy consumption: Experimental evidence for present bias and biased price beliefs," CAWM Discussion Papers 111, University of Münster, Center of Applied Economic Research Münster (CAWM).
    4. Baikowski, Martin, 2018. "Impacts of consumers' electricity price misperceptions," CAWM Discussion Papers 105, University of Münster, Center of Applied Economic Research Münster (CAWM).
    5. Massimo Filippini & Nilkanth Kumar & Suchita Srinivasan, 2019. "Energy-related financial literacy and bounded rationality in appliance replacement attitudes: Evidence from Nepal," CER-ETH Economics working paper series 19/315, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. Ana Martins & Mara Madaleno & Marta Ferreira Dias, 2020. "Financial Knowledge’s Role in Portuguese Energy Literacy," Energies, MDPI, Open Access Journal, vol. 13(13), pages 1-22, July.
    7. Victor von Loessl & Heike Wetzel, 2019. "Revenue decoupling and energy consumption: Empirical evidence from the U.S. electric utilities sector," MAGKS Papers on Economics 201918, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Brandsma, Jeroen S. & Blasch, Julia E., 2019. "One for all? – The impact of different types of energy feedback and goal setting on individuals’ motivation to conserve electricity," Energy Policy, Elsevier, vol. 135(C).

    More about this item

    Keywords

    Stochastic frontier analysis; Transient and persistent efficiency; Energy literacy; Investment literacy; Energy saving behaviour; Residential electricity demand; Household data;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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