Inform Me When It Matters: Cost Salience, Energy Consumption, and Efficiency Investments
39 Pages Posted: 4 Sep 2020 Last revised: 1 Aug 2022
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: Suggested Citation