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Behavioral Anomalies and Energy-related Individual Choices: The Role of Status-quo Bias

Abstract:
The literature on the energy-efficiency gap discusses the status-quo bias as a behavioral anomaly that potentially increases a household's energy consumption. We empirically investigate the extent to which the status-quo bias is linked to residential electricity consumption through two channels: non-replacement of old appliances and overuse of appliances. Using data from a large household survey conducted in three European countries, we find that our measure of status-quo bias is a significant predictor of both the age of home appliances and the level of a household's consumption of energy services. This is also reflected in the total electricity consumption, which is found to be around 6% higher when the household head is status-quo biased. We thus provide empirical evidence that the status-quo bias may represent a substantial barrier to increasing residential energy efficiency. Our findings prompt policy makers to design instruments that take this barrier into account.

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Keywords: Behavioral anomalies, Status-quo bias, Appliances replacement, Energy efficiency, Residential energy consumption

DOI: 10.5547/01956574.41.6.jbla

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Published in Volume 41, Number 6 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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