willingness to pay for Energy Star label
Matt Lucas
Check out this interesting journal article about the willingness of
consumers to pay for Energy Star labeled refrigerators. Conclusion and
link below.
Best of luck starting the spring semester,
Matt
The results from this study indicate that consumers have a
positive and significantly greater WTP for ENERGY STAR qualified
refrigerators than for other refrigerators. Depending on model
specification, the estimate of mean WTP for the ENERGY STAR label
ranged from $249.82 to $349.30. Further, the results indicate that
consumer WTP was influenced by demographics and attitudes.
Preferences for refrigerators awarded the ENERGY STAR label
decreased with age, but were higher among males than females.
While the former conforms to the literature, the latter was something
of a surprise as WTP for eco-labels has typically been found to
be higher among females than among males. While this result
might be attributable to the private benefits (energy cost savings)
associated with the ENERGY STAR label, further analysis was
unable to support this hypothesis. Given these results, the role
of gender in responses to environmental labels with public and
private attributes is worthy of further investigation.
In this study, there was evidence that respondents were
influenced by both the public and private benefits. The positive
and significant coefficients on the interactions between the label
and a perceived consumer effectiveness index (PCE Label) and an
index representing the respondent�s perceived need for action on
climate change and the environment (ACT Label) suggest that
individuals were, in part, motivated by concern for the environment.
In addition, based on what respondents were told about the
electricity cost savings associated with the ENERGY STAR label,
mean WTP for the label easily exceeds even the undiscounted
stream of likely electricity cost savings, suggesting that consumers
were not solely motivated by energy cost savings. However, the
positive and significant coefficient on the interaction term between
the label and the estimated rate consumers pay for electricity
(kWh Label) was positive and significant, suggesting that consumers
who pay higher electricity rates are willing to pay more for
an ENERGY STAR labeled refrigerator. Hence, refrigerator consumers
who are influenced by the ENERGY STAR label appear to be
motivated not only by energy cost savings, but also by the promise
of reducing environmental damage associated with energy consumption.
These results suggest that promotion of ENERGY STAR
labeled products on the basis of both public and private benefits is
well-targeted and that both of these sets of attributes will likely
play a significant role in a consumer�s decision making process
when selecting a new appliance.