Do operating costs at point of sale encourage more EE sales

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Presentation transcript:

Choosing energy efficiency – consumer response to operating costs at the point of sale Do operating costs at point of sale encourage more EE sales? A review of findings of published studies. Only time for major points in presentation – more details in paper. 18 September 2018 Fiona Brocklehurst Ballarat Consulting

Outline Why should operating costs make a difference? What do recent studies tell us? How could future studies be done better? Also – structure different to paper – as results inconclusive focussing on how studies could be done better How am I going to tell this? Using images as much as possible – more engaging, more memorable

Labels make energy visible Missing information. Manufacturers and retailers provide lots of information on products and features but without regulation generally not energy Labels fill the gap. Mostly give energy efficiency classification and energy information (eg China, EU, India,

Why operating cost label? Monetizing efficiency, temporal framing, framing to induce loss aversion, (lost savings) Also general assumption for EE (not just cars and appliances) Higher initial costs – save over lifetime as lower operational (energy) costs So extra value above energy only label… Also

But - difficult to make operating cost labels reflect consumer’s circumstances Incorrect information could be worse than none at all Usage can vary widely for

Technology to the rescue? PocketWatt tool developed as part of Digi-Label project, funded by the European Commission under H2020 Does operational cost information increase sales of energy efficient products?

Review 15 recent studies covering a range of products Details in paper 15 selected with use of control groups and no of participants large enough to give stat robust findings

Methods used Choice experiment – 11 examples Field experiment (in store and online) - 5 examples (one study included a choice and field experiment)

What did I find? A mess This is not my desk! Most found some statistically valid effect - 10 did 3 mixed (for some products not all) 3 no effect Generally effect small no progress from previous review (2009).

What can we say? This is hard!! Real data is messy. Too many variables – can’t pick out under what circumstances get positive result. Eg Same product, different result! Methods different, products different, motivation different (and way data presented different – not even starting on that!) Can only really compare field and online for same products? Indicates online more likely to be positive

What does this mean for policy makers? No compelling evidence for change – not always gain and gains are small. As data on appliances becomes more accessible (eg EU energy label registration database) market may provide solutions

Issues for researchers #1 Initial cost not always α with EE Most papers/report don’t include market data. Some that do find EE and initial price correlate but some don’t eg DECC 2014 Similar (low or no correlation) for tumble dryers (condenser and vented) and washer dryers Sometimes initial costs higher for more EE goods but not always. How pick out lowest lifetime cost from this? Effect of cost label expected to be lower? Although still: Monetizing efficiency, temporal framing, framing to induce loss aversion, Stadelmannm, & Schubert and others have found people overestimate operating costs of appliances – small ones especially. So, found EU (energy only) label more effective than cost label… Think about this! Scatter plot of price by energy consumption for washing machines (DECC 2014)

Issues for researchers #2 Effect of scale of savings (absolute) Thaler and subsequent found small savings heavily discounted – less likely to have effect. Review backed this up - some studies looked at different time periods for operational savings and most found longer period, higher savings, greater effect. But not all! Cars - Camilleri & Larrick dip at ‘mid’ level! If field experiment retailer may restrict (Carroll et al 2016 restricted to 5 years when wanted 10) but in choice experiment why not lifetime?? Or look at range? Use 5 year, 10 year or lifetime costs rather than annual to increase scale?

Issues for researchers #3 Scale of operational relative to initial costs vs Have not found discussion of this in literature but would expect it to make a difference from my own psychology! Could reinforce point of using as long a period for operational costs as possible In studies vary from: operational costs 1/10 (annual costs) to roughly same as initial costs (for lifetime costs) Also range of costs – savings of best to least Make a difference?

Issues for researchers #4 Not all products are the same #1 ≠ ≠ Purchasing process and factors considered are different for different product types

Issues for researchers #5 Not all products are the same #2 ≠ ≠ Lighting but also car technology If higher energy efficiency means change in technology other factors may come into play

Issues for researchers #6 Familiarity with operational costs? vs If used to seeing operational cost data on labels does that make a difference? Not addressed by researchers except Swiss study Repeat same methodology in different countries? (US vs EU or Australia)

Summary Analysis of 15 studies since last review (2009) Range of method, products, timeframe for operational costs Most (10) showed increase in energy efficiency of purchases with operational cost information but not all (3 mixed, depending on product; 3 none) Effect generally small Evidence base not significantly strengthened since last review Several recommendations to increase utility of future studies

Thank you for coming to this session

Questions? Thank you! Contact: Fiona (at) ballaratconsulting.co.uk