Does Better Information Lead to Better Choices? Evidence from Energy-Efficiency Labels / Lucas W. Davis, Gilbert E. Metcalf.

Format:

Book

Author/Creator:

Davis, Lucas W.

Contributor:

National Bureau of Economic Research.

Metcalf, Gilbert E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20720.

NBER working paper series no. w20720

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

Information provision is a key element of government energy-efficiency policy, but the information that is provided is often too coarse to allow consumers to make efficient decisions. An important example is the ubiquitous yellow "EnergyGuide" label, which is required by law to be displayed on all major appliances sold in the United States. These labels report energy cost information based on average national usage and energy prices. We conduct an online randomized controlled trial to measure the potential benefits from providing more accurate information. We find that state-specific labels lead to significantly better choices. Consumers invest about the same amount overall in energy-efficiency, but the allocation is much better with more investment in high-usage high-price states and less investment in low-usage low-price states. The implied aggregate cost savings are larger than any reasonable estimate of the cost of implementing state-specific labels.

Notes:

Print version record

November 2014.