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Casting light on energy efficiency: Evidence on consumer inattention and imperfect information

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  • Rodemeier, Matthias
  • Löschel, Andreas
  • Kube, Roland

Abstract

We investigate consumer inattention and imperfect information regarding the financial benefits of energy-efficient lighting using a randomized controlled trial with 1,084 observations. Results suggest that subjects generally know about cost savings of LED bulbs - the central lighting technology of the future - but largely underestimate the magnitude of these savings. As a result, stated willingness-to-pay for an LED bulb increases on average by 2.53€ through the provision of information on expected lifetime costs. Consumers also confound technology attributes of energy-efficient alternatives, which further explains low adoption rates of the LED technology.

Suggested Citation

  • Rodemeier, Matthias & Löschel, Andreas & Kube, Roland, 2017. "Casting light on energy efficiency: Evidence on consumer inattention and imperfect information," CAWM Discussion Papers 93, University of Münster, Münster Center for Economic Policy (MEP).
    • Handle: RePEc:zbw:cawmdp:93
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    References listed on IDEAS

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    1. Hunt Allcott & Dmitry Taubinsky, 2015. "Evaluating Behaviorally Motivated Policy: Experimental Evidence from the Lightbulb Market," American Economic Review, American Economic Association, vol. 105(8), pages 2501-2538, August.
    2. James M. Sallee, 2014. "Rational Inattention and Energy Efficiency," Journal of Law and Economics, University of Chicago Press, vol. 57(3), pages 781-820.
    3. Wall, Rob & Crosbie, Tracey, 2009. "Potential for reducing electricity demand for lighting in households: An exploratory socio-technical study," Energy Policy, Elsevier, vol. 37(3), pages 1021-1031, March.
    4. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
    5. Todd Gerarden & Richard G. Newell & Robert N. Stavins, 2015. "Deconstructing the Energy-Efficiency Gap: Conceptual Frameworks and Evidence," American Economic Review, American Economic Association, vol. 105(5), pages 183-186, May.
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    Cited by:

    1. Blum, Bianca & Hübner, Julian & Berger, Harald & Neumärker, Karl Justus Bernhard, 2018. "Libertarian paternalistic instruments fostering sustainable energy consumption: An analysis based on energy-efficient LED technology," The Constitutional Economics Network Working Papers 03-2018, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
    2. Cali Curley & Galib Rustamov & Nicky Harrison & Madeline Venable, 2020. "Susceptibility to Inattention: Unpacking Who is Susceptible to Inattention in Energy‐Based Electronic Billing," Review of Policy Research, Policy Studies Organization, vol. 37(6), pages 744-764, November.

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    More about this item

    Keywords

    Imperfect Information; Inattention; Energy Efficiency Gap; Experimental Economics;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • 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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