Journal
ECONOMICS OF ENERGY & ENVIRONMENTAL POLICY
Volume 10, Issue 2, Pages 149-180Publisher
INT ASSOC ENERGY ECONOMICS
DOI: 10.5547/2160-5890.10.2.jbla
Keywords
Household decision making; Bounded rationality; Financial literacy; Consumer durables; Energy efficiency
Categories
Funding
- European Union's Horizon 2020 research and innovation programme [723791]
- Swiss State Secretariat for Education, Research and Innovation (SERI) [16.0087]
- Swiss Commission for Technology and Innovation (CTI)/Innosuisse
- H2020 Societal Challenges Programme [723791] Funding Source: H2020 Societal Challenges Programme
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The untapped energy savings potential in the residential sector could lead to substantial welfare losses. Limited energy-specific knowledge and financial literacy play important roles in the adoption of energy-efficient durable goods. Therefore, promoting energy-specific financial education programs and tools can help increase the adoption of energy-efficient durable goods.
Untapped energy savings potential in the residential sector might lead to substantial welfare losses. While several studies have focused on the role of behavioral biases in explaining the lack of adoption of energy-efficient durable goods, little is known about the role of limited energy-specific knowledge and financial literacy. In this paper, we propose an integrated concept of `energy-related financial literacy', which combines both energy cost-specific knowledge and skills needed to process this information. Using data from a large household survey in three European countries, we explore the determinants of different measures of literacy and, most importantly, we provide empirical evidence on the association between limited knowledge and skills to perform an intertemporal optimization and the adoption of energy-efficient light bulbs. Our findings support the promotion of energy-specific financial education programs and tools to increase the adoption of energy-efficient durable goods.
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