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"Show Me the Energy Costs": Short and Long-term Energy Cost Disclosure Effects on Willingness-to-pay for Residential Energy Efficiency

Imperfect information on future energy costs can lower the demand for more energy efficient technologies, with clear implications for energy supply, emissions and climate change. These hypotheses are explored using a randomised discrete choice experiment for property rental decisions. Results show that when energy consumption is expressed in physical units (as per the current EU labels) the willingness-to-pay for energy efficiency improvements is small and marginally significant. While bimonthly energy cost information displayed in monetary terms has no effect on the valuation of energy efficiency, annual monetary energy cost information led to a significant increase. This is the first paper to compare short and long-term point of sale energy cost information for household property decisions. There are clear implications for labelling policy for properties—framing energy consumption according to long-term monetary cost increases the demand for energy efficiency.

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Keywords: Energy Efficiency Labels, Cost Labels, Discrete Choice Experiment, Rental Properties, Framing Effect, Ireland

DOI: 10.5547/01956574.43.2.jcar

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Published in Volume 43, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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