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Does Better Information Lead to Better Choices? Evidence from Energy-Efficiency Labels

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  • Lucas W. Davis
  • Gilbert E. Metcalf

Abstract

Information provision is a key element of government energy-efficiency policy, but the information that is provided is often too coarse to allow consumers to make efficient decisions. An important example is the ubiquitous yellow "Energy Guide" label, which is required by law to be displayed on all major appliances sold in the United States. These labels report energy cost information based on average national usage and energy prices. We conduct an online randomized controlled trial to measure the potential benefits from providing more accurate information. We find that state-specific labels lead to significantly better choices. Consumers invest about the same amount overall in energy-efficiency, but the allocation is much better with more investment in high-usage high-price states and less investment in low-usage low-price states. The implied aggregate cost savings are larger than any reasonable estimate of the cost of implementing state-specific labels.

Suggested Citation

  • Lucas W. Davis & Gilbert E. Metcalf, 2014. "Does Better Information Lead to Better Choices? Evidence from Energy-Efficiency Labels," Discussion Papers Series, Department of Economics, Tufts University 0788, Department of Economics, Tufts University.
    • Handle: RePEc:tuf:tuftec:0788
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    References listed on IDEAS

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    More about this item

    Keywords

    Energy-Efficiency; Information Provision; Air Conditioning; Energy Demand;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H49 - Public Economics - - Publicly Provided Goods - - - Other
    • 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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