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Energy-related financial literacy and bounded rationality in appliance replacement attitudes: evidence from Nepal

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  • Filippini, Massimo
  • Kumar, Nilkanth
  • Srinivasan, Suchita

Abstract

As countries develop, they are likely to face challenges in meeting growing energy demand and in ensuring energy security. Given this, and the problem of climate change, improving demand-side energy efficiency is pivotal to ensuring sustainable development. However, agents often underinvest in energy-efficient technologies due to behavioral failures such as low levels of energy-related financial literacy, defined as the combination of energy knowledge and cognitive abilities needed to evaluate the lifetime costs of durables. Using novel data, we analyze the levels and determinants of energy-related financial literacy of households in urban areas in the eastern lowlands of Nepal, and whether it is correlated with their attitudes towards replacement of energy-inefficient appliances. We find that respondents have low levels of energy-related financial literacy, and higher levels of literacy are associated with more rational attitudes towards appliance replacement. The findings of this study are relevant to addressing the energy-efficiency gap in developing countries.

Suggested Citation

  • Filippini, Massimo & Kumar, Nilkanth & Srinivasan, Suchita, 2020. "Energy-related financial literacy and bounded rationality in appliance replacement attitudes: evidence from Nepal," Environment and Development Economics, Cambridge University Press, vol. 25(4), pages 399-422, August.
    • Handle: RePEc:cup:endeec:v:25:y:2020:i:4:p:399-422_5
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    Cited by:

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    2. Ana Martins & Mara Madaleno & Marta Ferreira Dias, 2020. "Financial Knowledge’s Role in Portuguese Energy Literacy," Energies, MDPI, vol. 13(13), pages 1-22, July.
    3. Broberg, Thomas & Kažukauskas, Andrius, 2021. "Information policies and biased cost perceptions - The case of Swedish residential energy consumption," Energy Policy, Elsevier, vol. 149(C).
    4. Paweł Białynicki-Birula & Kamil Makieła & Łukasz Mamica, 2022. "Energy Literacy and Its Determinants among Students within the Context of Public Intervention in Poland," Energies, MDPI, vol. 15(15), pages 1-20, July.
    5. Teija Keränen & Heidi Enwald, 2023. "Everyday Energy Information Literacy and Attitudes towards Energy-Related Decisions: Gender Differences among Finns," Resources, MDPI, vol. 12(6), pages 1-16, June.
    6. Nilkanth Kumar & Nirmal Kumar Raut & Suchita Srinivasan, 2022. "Herd behavior in the choice of motorcycles: Evidence from Nepal," CER-ETH Economics working paper series 22/366, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Bożena Gajdzik & Radosław Wolniak & Rafał Nagaj & Brigita Žuromskaitė-Nagaj & Wieslaw Wes Grebski, 2024. "The Influence of the Global Energy Crisis on Energy Efficiency: A Comprehensive Analysis," Energies, MDPI, vol. 17(4), pages 1-51, February.
    8. Panu Kalmi & Gianluca Trotta & Andrius Kažukauskas, 2021. "Energy‐related financial literacy and electricity consumption: Survey‐based evidence from Finland," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(3), pages 1062-1089, September.
    9. Bharadwaj, Bishal & Subedi, Mukti Nath & Malakar, Yuwan & Ashworth, Peta, 2023. "Low-capacity decentralized electricity systems limit the adoption of electronic appliances in rural Nepal," Energy Policy, Elsevier, vol. 177(C).
    10. Asmare, Fissha & Giedraitis, Vincentas & Jaraitė, Jūratė & Kažukauskas, Andrius, 2023. "Energy-related financial literacy and retrofits of Soviet-era apartment buildings: The case of Lithuania," Energy Economics, Elsevier, vol. 120(C).
    11. Oscar S. Santillán & Karla G. Cedano, 2023. "Energy Literacy: A Systematic Review of the Scientific Literature," Energies, MDPI, vol. 16(21), pages 1-19, October.
    12. Malla, Sunil, 2022. "An outlook of end-use energy demand based on a clean energy and technology transformation of the household sector in Nepal," Energy, Elsevier, vol. 238(PB).

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • 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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