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Consumer Inattention, Heuristic Thinking and the Role of Energy Labels

29 Pages Posted: 25 Nov 2016  

Mark Andor

RWI - Leibniz-Institute for Economic Research

Andreas Gerster

RWI – Leibniz Institute for Economic Research

Stephan Sommer

RWI - Leibniz-Institute for Economic Research

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Date Written: October 31, 2016

Abstract

Energy labels have been introduced in many countries to increase consumers’ attention to energy use in purchase decisions of durables. In a discrete-choice experiment among about 5,000 households, we implement randomized information treatments to explore the effects of various kinds of energy labels on purchasing decisions.

Our results show that adding annual operating cost information to the EU energy label promotes the choice of energy-efficient durables. In addition, we find that a majority of participants value efficiency classes beyond the economic value of the underlying energy use differences. Our results further indicate that displaying operating cost affects choices through two distinct channels: it increases the attention to operating cost and reduces the valuation of efficiency class differences.

Keywords: Environmental certification, discrete choice experiment, energy efficiency, energyusing durables

JEL Classification: D03, D12, D83, Q48, Q50

Suggested Citation

Andor, Mark and Gerster, Andreas and Sommer, Stephan, Consumer Inattention, Heuristic Thinking and the Role of Energy Labels (October 31, 2016). USAEE Working Paper No. 16-287. Available at SSRN: https://ssrn.com/abstract=2874905

Mark Andor (Contact Author)

RWI - Leibniz-Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

HOME PAGE: http://en.rwi-essen.de/mark-andor

Andreas Gerster

RWI – Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Stephan Sommer

RWI - Leibniz-Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

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