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Nudging energy efficiency behavior: The effect of message framing on implicit discount rate

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  • Park, Jiyong
  • Son, WooJin
  • Moon, HyungBin
  • Woo, JongRoul

Abstract

We experimentally and empirically analyzed how gain-framing and loss-framing information regarding the economic benefits of purchasing a high-efficiency appliance affects consumers' implicit discount rate (IDR). For the empirical analysis, we focused on the South Korean air purifier market, and we used the contingent valuation method to estimate the IDR. The results suggest differences in consumer groups that respond more sensitively to message framing. In the loss frame, the respondents' cognition level showed an influence on the IDR. The median IDR was 10.15% and 6.59% in the gain and loss frames, respectively. These figures were higher than the general market discount rate, regardless of how the given information was framed, thus confirming an energy efficiency gap. We deduced that there are more consumers with a very low IDR in the loss frame than in the gain frame. Hence, it will be possible to reduce the energy efficiency investment gap and encourage consumers to voluntarily invest in energy efficiency through message framing nudging via consumption efficiency appliance labels.

Suggested Citation

  • Park, Jiyong & Son, WooJin & Moon, HyungBin & Woo, JongRoul, 2023. "Nudging energy efficiency behavior: The effect of message framing on implicit discount rate," Energy Economics, Elsevier, vol. 117(C).
    • Handle: RePEc:eee:eneeco:v:117:y:2023:i:c:s0140988322006144
    DOI: 10.1016/j.eneco.2022.106485
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    Cited by:

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    3. Srivastava, Praveen Ranjan & Mangla, Sachin Kumar & Eachempati, Prajwal & Tiwari, Aviral Kumar, 2023. "An explainable artificial intelligence approach to understanding drivers of economic energy consumption and sustainability," Energy Economics, Elsevier, vol. 125(C).
    4. Park, Jiyong & Woo, JongRoul, 2023. "Analyzing consumers' willingness to purchase energy-efficient appliances in response to energy price changes: Case study of South Korea," Energy Economics, Elsevier, vol. 127(PA).

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    More about this item

    Keywords

    Energy efficiency behavior; Message framing effect; Implicit discount rate; Nudge theory; Contingent valuation method;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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