Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171719
Authors: 
Blasch, Julia
Filippini, Massimo
Kumar, Nilkanth
Martinez-Cruz, Adan
Year of Publication: 
2017
Series/Report no.: 
Economics Working Paper Series 17/276
Abstract: 
There is evidence that many individuals make sub-optimal investment decisions when the benefits and costs associated with that decision are distributed over time. One example is the decision to adopt new electrical appliances, with the benefits of choosing a more energy efficient device materializing only in the future. This paper analyses the impact of the level of an individual’s energy-related investment literacy on the adoption of energy-efficient appliances. Moreover, the empirical analysis explores the impact of decision support tools such as educational slides on the probability that individuals identify the appliance with the lowest lifetime cost, which is ideally also the most energy-efficient appliance. To test the influence of these decision support tools, we developed an online randomized controlled trial and implemented it on two independently chosen samples of the Swiss population. One treatment offers a short education program on how to calculate the lifetime cost of an appliance – via a set of information slides. The second intervention provides access to an online calculator that supports the investment decision-making of the individual. Results across the two samples are encouraging. We find that i) pre-treatment energy and investment literacy positively impact on the probability of identifying the appliance with the lowest lifetime cost; ii) the reinforcement of energy-related investment literacy increases the rate at which individuals identify the appliance with the lowest lifetime cost; and iii) while both interventions are effective in increasing the chances that an appliance with the lower lifetime cost is chosen, the online calculator turned out to be more effective than the educational program. Public policy implications are discussed.
Subjects: 
energy-efficient appliances
energy-related investment literacy
appliance choice
bounded rationality
educational programs
online tool
JEL: 
D12
D80
Q41
Q48
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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