Econonomics of Energy and Environmental Policy

Article Details

IAEE Members and subscribers to Economics of Energy & Environmental Policy : Please log in to access the full text article.

Empower the Consumer! Energy-related Financial Literacy and its Implications for Economic Decision Making

Open Access Article

Abstract:
Untapped energy savings potential in the residential sector might lead to substantial welfare losses. While several studies have focused on the role of behavioral biases in explaining the lack of adoption of energy-efficient durable goods, little is known about the role of limited energy-specific knowledge and financial literacy. In this paper, we propose an integrated concept of ‘energy-related financial literacy’, which combines both energy cost-specific knowledge and skills needed to process this information. Using data from a large household survey in three European countries, we explore the determinants of different measures of literacy and, most importantly, we provide empirical evidence on the association between limited knowledge and skills to perform an intertemporal optimization and the adoption of energy-efficient light bulbs. Our findings support the promotion of energy-specific financial education programs and tools to increase the adoption of energy-efficient durable goods.
Download PDF

Executive Summary: View

Keywords: Household decision making, Bounded rationality, Financial literacy, Consumer durables, Energy efficiency

DOI: 10.5547/2160-5890.10.2.jbla


Reference information is available for this article. Join IAEE or purchase the article to view reference data.


Published in Volume 10, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


 

© 2021 International Association for Energy Economics | Privacy Policy | Return Policy