DDRIG in DRMS: Policy Interactions and Consumer Decision-making in the Market for Energy-Efficient Products.

Cornell University, Ithaca NY

Investigators

Abstract

Information provision and financial incentives are important components of energy efficiency policy. The former addresses the failure of the market to provide complete information on the costs and benefits of purchasing energy-efficient products, while the latter addresses the fact that consumers do not capture the full social value of environmental goods and services. Using insights from economics and psychology, this research seeks to understand why programs using information provision and financial incentives as tools have been unable to close the “energy efficiency gap,” the gap between actual and desired adoption of energy-efficient technology, among households in the United States. This research develops interventions that provide information on the cost-savings and emissions benefits of purchasing an energy-efficient product, discounts on that same product, or both, and dissects the behavioral effects of those interventions. As a result, this work has the following broader impacts: improved societal welfare through energy use reduction, which saves consumers money and mitigates anthropogenic climate change; and promotion of the progress of science through an enhanced grasp on the drivers of, and obstacles to scientific literacy. This research investigates two explanations for the energy efficiency gap: 1) the possibility of policy interactions when multiple policy instruments are simultaneously used; and 2) the possibility that policy choice not only impacts the final choices people make but also the process through which people make choices. These explanations lead to a theoretically motivated research design that consists of an online survey-experiment in which respondents are randomized into different treatments that vary the information and incentives representing different policy mixes. Respondents’ demand for an energy-efficient product is elicited, and other data on their decision-making and predictors of their decision-making are collected, including data on their demographic, behavioral, cognitive, and attitudinal characteristics. Survey responses are linked to actual purchase decisions to incentivize the realism of respondents’ choices. Results give insights into interventions leading to increase in demand for an energy-efficient product. Interventions include interactions between information and incentives, such as whether information on the emissions impact of purchasing energy-efficient products can effectively supplement cost information, and whether prompting respondents to deliberate over their preferences can increase demand for energy efficiency. By exploring different policy options and potential behavioral mechanisms behind policy responses, this project informs policy design. It also advances guidance on policy implementation and contributes to a deeper understanding of consumer decision-making as affected by policies. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.