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Energy Cost Information and Consumer Decisions: Results from a Choice Experiment on Refrigerator Purchases in India

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  • Manisha Jain
  • Anand B. Rao
  • Anand Patwardhan

Abstract

Appliance labels allow consumers to choose products based on their energy use. In most countries, the widely adopted comparative categorical labels give information on energy use in physical units such as kilowatt-hour. Studies on the impact of monetary cost information on labels have reported different results across appliances within studies, and for the same appliances across studies. Recent studies on refrigerators show that monetary information increases the probability of cost-effectiveness analysis and fosters choice of energy-efficient refrigerators but do not estimate the consumer willingness to pay for higher efficiency category. In a discrete choice experiment, we observe choices of a sample of households divided into groups based on whether they get operating cost information on hypothetical choices. We estimate a mixed logit model with correlated random parameters and estimate the magnitude and distribution of consumer willingness to pay for higher energy efficiency category. We find that energy cost information on labels facilitate comparison of refrigerators based on energy-efficiency and leads to a positive willingness to pay for higher levels of energy efficiency. It also increases the share of respondents having a positive willingness to pay for higher efficiency. We conclude that annual energy cost information on refrigerator labels can improve the effectiveness of labelling policy in India.

Suggested Citation

  • Manisha Jain & Anand B. Rao & Anand Patwardhan, 2021. "Energy Cost Information and Consumer Decisions: Results from a Choice Experiment on Refrigerator Purchases in India," The Energy Journal, , vol. 42(2), pages 252-272, March.
    • Handle: RePEc:sae:enejou:v:42:y:2021:i:2:p:252-272
    DOI: 10.5547/01956574.42.2.mjai
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    References listed on IDEAS

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    1. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    2. Lucas W. Davis & Gilbert E. Metcalf, 2016. "Does Better Information Lead to Better Choices? Evidence from Energy-Efficiency Labels," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 589-625.
    3. Henry Ruderman & Mark D. Levine & James E. McMahon, 1987. "The Behavior of the Market for Energy Efficiency in Residential Appliances Including Heating and Cooling Equipment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 101-124.
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    Cited by:

    1. Stefano Ceolotto & Eleanor Denny, 2021. "Putting a new 'spin' on energy labels: measuring the impact of reframing energy efficiency on tumble dryer choices in a multi-country experiment," Trinity Economics Papers tep1521, Trinity College Dublin, Department of Economics.
    2. S. Ceolotto & E. Denny, 2024. "Putting a New ‘Spin’ on Energy Information: Measuring the Impact of Reframing Energy Efficiency Information on Tumble Dryer Choices in a Multi-country Experiment," Journal of Consumer Policy, Springer, vol. 47(1), pages 51-108, March.
    3. Schleich, Joachim & Durand, Antoine & Brugger, Heike, 2021. "How effective are EU minimum energy performance standards and energy labels for cold appliances?," Energy Policy, Elsevier, vol. 149(C).
    4. He, Shutong & Blasch, Julia & van Beukering, Pieter & Wang, Junfeng, 2022. "Energy labels and heuristic decision-making: The role of cognition and energy literacy," Energy Economics, Elsevier, vol. 114(C).
    5. Peter M. Schwarz & Craig A. Depken II & Michael W. Herron & Benjamin J. Correlf, 2021. "ENERGY STAR Appliance Market Shares: Do They Respond to Electricity Prices, and Does It Matter?," The Energy Journal, , vol. 42(4), pages 253-266, July.

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    More about this item

    Keywords

    Energy efficiency; Appliance labelling; Willingness to pay; Energy cost information; Discrete choice model;
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    JEL classification:

    • F0 - International Economics - - General

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