How effective is the European Union energy label? Evidence from a real-stakes experiment

Abstract

Imperfect information and inattention can lead consumers to undervalue the energy efficiency of products, contributing to growing environmental problems and climate change. To nudge individuals towards energy efficiency, environmental certification schemes, such as the European Union (EU) energy label, present grade-like efficiency classes. In a real-stakes randomized controlled trial, we contrast this approach with a control condition that gives no energy-related information and an alternative treatment condition that provides detailed information on the lifetime cost of energy-using durables. Our results show that the EU energy label does not increase demand for energy-efficient products over a control condition. By contrast, lifetime-cost information increases the willingness-to-pay for energy efficiency considerably.