Working Paper: NBER ID: w20720
Authors: Lucas W. Davis; Gilbert E. Metcalf
Abstract: Information provision is a key element of government energy-efficiency policy, but the information that is provided is often too coarse to allow consumers to make efficient decisions. An important example is the ubiquitous yellow “EnergyGuide” label, which is required by law to be displayed on all major appliances sold in the United States. These labels report energy cost information based on average national usage and energy prices. We conduct an online randomized controlled trial to measure the potential benefits from providing more accurate information. We find that state-specific labels lead to significantly better choices. Consumers invest about the same amount overall in energy-efficiency, but the allocation is much better with more investment in high-usage high-price states and less investment in low-usage low-price states. The implied aggregate cost savings are larger than any reasonable estimate of the cost of implementing state-specific labels.
Keywords: Energy Efficiency; Consumer Choice; Information Provision; Labels
JEL Codes: D12; H49; Q41; Q48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| operating costs (D23) | consumer behavior (D19) |
| state-specific energy efficiency labels (Q48) | better consumer choices (D18) |
| better information (D83) | better consumer choices (D18) |
| state-specific energy efficiency labels (Q48) | average lifetime cost of appliances (L68) |
| better information (D83) | substantial aggregate cost savings (D61) |
| state-specific labels (H70) | better allocation of energy efficiency investments (D61) |