Risk Preference, Discount Rate and Purchase of Energy-Efficient Technologies in the Residential Sector

we aim to investigate the relationship between consumers’ risk preference, private discount rate and their purchase decisions. While a common barrier for the diffusion of efficient technologies is the high upfront cost, there is also uncertainty about the benefits an individual will ultimately obtain from adoption. This poster aim to assess the relationship between consumer behavior and household willingness to purchase energy efficient technologies, to measure how Risk Aversion and Time Preferences affect household willingness to purchase appliances with uncertain future benefits, and to investigate the relationship between household Risk Aversion and Time Preferences when considering residential energy efficient technologies. Data were collected in Spring 2013 using online choice experiments with 607 homeowners in Arizona and California including a risk and discount rate experiment The survey included four separate Multiple Price List (MPL) experiments. We found that measures of Risk Aversion in the context of energy efficient appliance purchases differ from measures elicited in the generic frame. No difference in household Discount Rates are found between the generic and energy efficient appliance frame. Households that are more Risk Averse tend to have a higher Discount Rates. Households that are more Risk Averse or have higher Discount Rates are less likely to engage in energy efficient retrofits.