Explaining electricity demand and the role of energy and investment literacy on end-use efficiency of Swiss households

J.E. Blasch; Massimo Filippini; Nina Boogen; Nilkanth Kumar

doi:10.1016/j.eneco.2017.12.004

Explaining electricity demand and the role of energy and investment literacy on end-use efficiency of Swiss households

J.E. Blasch, Massimo Filippini, Nina Boogen, Nilkanth Kumar

Environmental Economics

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

Abstract

This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the newly developed generalized true random effects model (GTREM). An unbalanced panel dataset of 1994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to enhance efficiency in the use of energy within households.

Original language	English
Pages (from-to)	89-102
Number of pages	14
Journal	Energy Economics
Volume	68
Issue number	1
DOIs	https://doi.org/10.1016/j.eneco.2017.12.004
Publication status	Published - 2017

Funding

We are grateful to the Bundesamt für Energie (BFE) for the financial support. BFE was not responsible for the study design, the collection, analysis and interpretation of data or in the writing of this paper. The content does not necessarily represent the official views of BFE. This research is also part of the activities of SCCER CREST, which is financially supported by the Swiss Commission for Technology and Innovation (CTI). All omissions and remaining errors are our responsibility. Furthermore, we would like to thank all the cooperating utilities who sent out invitations to participate in the household survey. Comments from two anonymous referees as well as from participants of the 2016 Atlantic Workshop on Energy and Environmental Economics (AWEEE), the 2017 European Workshop on Efficiency and Productivity Analysis (EWEPA), and the 2017 Annual Conference of the European Association of Environmental and Resource Economists (EAERE) are gratefully acknowledged.

Funders	Funder number
SCCER CREST
Kommission für Technologie und Innovation
Bundesamt für Energie
European Association of Environmental and Resource Economists

Keywords

Residential electricity demand
Stochastic frontier analysis
Transient and persistent efficiency
; Energy literacy
Investment literacy

UN SDGs

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

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10.1016/j.eneco.2017.12.004

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title = "Explaining electricity demand and the role of energy and investment literacy on end-use efficiency of Swiss households",

abstract = "This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the newly developed generalized true random effects model (GTREM). An unbalanced panel dataset of 1994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to enhance efficiency in the use of energy within households.",

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AU - Filippini, Massimo

AU - Boogen, Nina

AU - Kumar, Nilkanth

PY - 2017

Y1 - 2017

N2 - This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the newly developed generalized true random effects model (GTREM). An unbalanced panel dataset of 1994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to enhance efficiency in the use of energy within households.

AB - This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the newly developed generalized true random effects model (GTREM). An unbalanced panel dataset of 1994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to enhance efficiency in the use of energy within households.

KW - Residential electricity demand

KW - Stochastic frontier analysis

KW - Transient and persistent efficiency

KW - ; Energy literacy

KW - Investment literacy

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Explaining electricity demand and the role of energy and investment literacy on end-use efficiency of Swiss households

Abstract

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Keywords

UN SDGs

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The role of energy and investment literacy for residential electricity demand and end-use efficiency

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