The effect of life-cycle cost disclosure on consumer behavior

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dc.contributor.advisorRuth, Matthiasen_US
dc.contributor.authorDeutsch, Matthiasen_US
dc.contributor.departmentPublic Policyen_US
dc.contributor.publisherDigital Repository at the University of Marylanden_US
dc.contributor.publisherUniversity of Maryland (College Park, Md.)en_US
dc.date.accessioned2007-06-22T05:34:07Z
dc.date.available2007-06-22T05:34:07Z
dc.date.issued2007-04-25
dc.description.abstractFor more than 20 years, analysts have reported on the so-called "energy paradox" or the "energy efficiency gap", referring to the fact that economic agents could in principle lower their total cost at current prices by using more energy-efficient technology but, nevertheless, often decide not to do so. Theory suggests that providing information in a simplified way could potentially reduce this "efficiency gap". Such simplification may be achieved by providing the estimated monetary operating cost and life-cycle cost (LCC) of a given appliance--which has been a recurring theme within the energy policy and efficiency labeling community. Yet, little is known so far about the causal effects of LCC disclosure on consumer action because of the gap between the acquisition of efficiency information and consumer purchasing behavior in the real marketplace. This dissertation bridges the gap by experimentally integrating LCC disclosure into two major German commercial websites--a price comparison engine for cooling appliances, and an online shop for washing machines. Internet users arriving on these websites were randomly assigned to two experimental groups, and the groups were exposed to different visual stimuli. The control group received regular product price information, whereas the treatment group was, in addition, offered information about operating cost and total LCC. Click-stream data of consumers' shopping behavior was evaluated with multiple regression analysis by controlling for several product characteristics. This dissertation finds that LCC disclosure reduces the mean energy use of chosen cooling appliances by 2.5% (p<0.01), and the energy use of chosen washing machines by 0.8% (p<0.001). For the latter, it also reduces the mean water use by 0.7% (p<0.05). These effects suggest a potential role for public policy in promoting LCC disclosure. While I do not attempt to estimate the costs of such a policy, a simple quantification shows that the benefits amount to 100 to 200 thousand Euros per year for Germany, given current predictions regarding the price of tradable permits for CO2, and not counting other potential benefits. Future research should strive for increasing external validity, using better instruments, and evaluating the effectiveness of different information formats for LCC disclosure.en_US
dc.format.extent5751931 bytes
dc.format.mimetypeapplication/pdf
dc.identifier.urihttp://hdl.handle.net/1903/6794
dc.language.isoen_US
dc.subject.pqcontrolledEnergyen_US
dc.subject.pqcontrolledEconomics, Commerce - Businessen_US
dc.subject.pqcontrolledPsychology, Experimentalen_US
dc.subject.pquncontrolledenergy efficiencyen_US
dc.subject.pquncontrolledlabelingen_US
dc.subject.pquncontrolledinformationen_US
dc.subject.pquncontrolledinterneten_US
dc.subject.pquncontrolledevaluationen_US
dc.subject.pquncontrolledonline field experimenten_US
dc.titleThe effect of life-cycle cost disclosure on consumer behavioren_US
dc.typeDissertationen_US

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