Cognitive reflection and the valuation of energy efficiency

Abstract

Based on a stated-choice experiment among about 3,600 German household heads on the purchase of electricity-using durables, this paper explores the impact of cognitive reflection on consumers’ valuation of energy efficiency, as well as its interaction with consumers’ response to the EU energy label. Using a standard cognitive reflection test, our results indicate that consumers with low cognitive reflection scores value energy efficiency less than those with high scores. Furthermore, we find that consumers with a low level of cognitive reflection respond more strongly to grade-like energy efficiency classes than to detailed information on annual energy use.