Inform Me When It Matters: Cost Salience, Energy Consumption, and Efficiency Investments

39 Pages Posted: 4 Sep 2020 Last revised: 1 Aug 2022

See all articles by Puja Singhal

Puja Singhal

Potsdam Institute for Climate Impact Research (PIK)

Abstract

Using a large-scale natural experiment in staggered billing cycles for energy use in Germany and a unique billing dataset for multi-apartment buildings, this papers shows that billing cycles are a significant determinant of heat energy consumption. A large set of residential consumers demand significantly more heat energy annually, when the bill is issued during off-winter months. The paper finds further evidence for salience cycles of heating bills, likely because consumer attention to heat energy costs is short-lived and absent during months when heating is off. Importantly, this phenomena is pervasive enough to be detectable even in aggregated building-level consumption data. Results suggest that the mere knowledge of costs is not sufficient and that the response to billing information also hinges on its time-varying salience. These findings underscore the importance of understanding the dynamic and heterogeneous nature of cost salience in the design of effective billing and energy conservation campaigns.

Keywords: Heating bills, natural experiment, cost salience, consumer inattention, energy consumption, energy efficiency

JEL Classification: D12, Q41, Q48

Suggested Citation

Singhal, Puja, Inform Me When It Matters: Cost Salience, Energy Consumption, and Efficiency Investments. DIW Berlin Discussion Paper No. 1891, Available at SSRN: https://ssrn.com/abstract=3686418 or http://dx.doi.org/10.2139/ssrn.3686418

Puja Singhal (Contact Author)

Potsdam Institute for Climate Impact Research (PIK) ( email )

Telegrafenberg 31
Potsdam, 14473
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
33
Abstract Views
516
PlumX Metrics