Working Paper: NBER ID: w25591
Authors: Sébastien Houde; Erica Myers
Abstract: We estimate whether consumers respond to local energy costs when purchasing appliances. Using a dataset from an appliance retailer, we compare demand responsiveness to a measure of energy costs that varies with local energy prices versus purchase prices. We strongly reject that consumers are unresponsive to local energy costs under a wide range of assumptions. These findings run counter to the popular wisdom, which motivates energy standards, that energy costs are a shrouded attribute. Capital investments are an important channel for electricity demand response and may explain some of the large differences between short and long run electricity price elasticities.
Keywords: Energy Costs; Consumer Behavior; Appliance Market; Energy Efficiency
JEL Codes: D12; D83; Q41; Q50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| $100 in discounted future energy costs (Q48) | $0.82 in purchase price (D41) |
| local energy operating costs (Q40) | consumer responsiveness (D16) |
| higher local electricity prices (L97) | adoption of more energy-efficient appliances (L68) |
| local electricity prices (L97) | valuation of energy operating costs (Q40) |