Empower the Consumer! Energy-related Financial Literacy and its Implications for Economic Decision Making

Julia Blasch; Nina Boogen; Claudio Daminato; Massimo Filippini

doi:10.5547/2160-5890.10.2.jbla

Empower the Consumer! Energy-related Financial Literacy and its Implications for Economic Decision Making

Julia Blasch
, Nina Boogen
, Claudio Daminato
, Massimo Filippini

Environmental Economics

Research output: Contribution to Journal › Article › Academic › peer-review

Abstract

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.

Original language	English
Journal	Economics of Energy & Environmental Policy
Volume	10
Issue number	2
DOIs	https://doi.org/10.5547/2160-5890.10.2.jbla
Publication status	Published - Apr 2021

Funding

This paper is based on data collected within the EU H2020 Project “PENNY” (Psychological social & financial barriers to energy efficiency). We acknowledge financial support from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 723791 - project PENNY “Psychological, social and financial barriers to energy efficiency”, and financial support from the Swiss State Secretariat for Education, Research and Innovation (SERI) under contract number 16.0087. We would like to thank Cristina Catta-neo, Angela Ruepert, Ellen van der Werff and Linda Steg for the collaboration in collecting the survey data used in this study. Furthermore, we would like to thank the utilities that cooperated during the data collection process. This research is also part of the activities of SCCER CREST, which is financially supported by the Swiss Commission for Technology and Innovation (CTI) / Innosuisse. The authors would also like to thank participants at the 11th International Workshop on “Empirical Methods in Energy Economics”, the 8th Atlantic Workshop on Energy and Environmental Economics and the 5th European Conference on Behaviour and Energy Efficiency for helpful suggestions. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Swiss Government nor the European Commission. All omissions and remaining errors are the authors’ responsibility.

Funders	Funder number
SCCER CREST
Horizon 2020 Framework Programme	723791
Singapore Eye Research Institute	16.0087
Kommission für Technologie und Innovation
Staatssekretariat für Bildung, Forschung und Innovation

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Keywords

Household decision making
Bounded rationality
Financial literacy
Consumer durables
Energy efficiency
Energy literacy
Energy

VU Research Profile

Science for Sustainability

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10.5547/2160-5890.10.2.jbla

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Cite this

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abstract = "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 {\textquoteleft}energy-related financial literacy{\textquoteright}, 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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KW - Energy efficiency

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Empower the Consumer! Energy-related Financial Literacy and its Implications for Economic Decision Making

Abstract

Funding

UN SDGs

Keywords

VU Research Profile

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