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Energy labels that make cents: A randomised controlled trial to test the effect of appliance energy rating labels

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Partner agencies: 
Australian Government Department of the Environment and Energy
Registration date: 
Monday, 27 February 2017

When shopping for appliances, people can find it difficult to weigh up the advertised cost of an appliance against its long-term running costs. This is sometimes referred to as the ‘energy‑efficiency gap’.

BETA joined forces with the Australian Government Department of the Environment and Energy and Appliances Online to see if we could encourage consumers to buy more energy‑efficient appliances—helping them to save money.

Drawing on behavioural insights, we designed an alternative energy label and ran a trial to test whether it – or the existing Australian Energy Rating Label – helped people to choose more energy‑efficient appliances online.

We found energy labels have positive effects on consumer behaviour compared to no labels. These effects are large enough to warrant consideration by policy makers interested in the twin policy goals of reducing carbon emissions and household energy costs. We did not find any difference between the impact of the existing label and the alternative label.

Pre-registration information

When combined, relatively small inefficiencies in Australia’s household appliances market have the potential to generate large welfare losses for individuals and significant damage to the environment. Reducing household energy consumption is a key component to boosting Australia’s energy productivity.

The Australian Government employs a range of strategies to reduce household energy use and emissions, one of which is the Australian Energy Rating Label.  These labels provide consumers with information on energy-efficiency in a standardised format (energy consumption calculated by kWh per year). Evidence suggests that consumer understanding and interpretation of the label could be enhanced.

The study aims to provide evidence to maximise the alignment of consumer preferences with their choice in household appliances. In particular, the study aims to test the impact of a new behavioural economics-informed energy rating label on customer engagement in relation to higher energy efficient household appliances, in an online environment.

The trial is expected to run for approximately 30-days. We expect to have 13,000 unique observations over this period. This means approximately 4,333 individuals will be randomised into each of the experimental groups.

Additional trial information

Intervention start and end date: Tuesday, 28 February 2017 to Wednesday, 29 March 2017

BETA ethics pre-registration number: BETA ETH 2017 – 005, 9 February 2017

Experimental design: The study will be conducted in partnership with an Australian Government agency and an online retailer. It will use an individually randomised controlled trial with three experimental arms to determine the most effective way to support consumers to purchase products with lower predicted energy consumption over the life cycle of the product (kWh) using energy rating labels. Individuals who visit the online retailer’s website during the trial period will be randomised into one of three experimental arms. Aggregate (non-identified) data on behaviours of individuals in each experimental group will be analysed to assess the effects of different products labels.

Intervention(s): Individuals in the first treatment group will see the same products with the standard energy rating label that is currently mandated for use on those appliances when they are sold in (bricks-and-mortar) retail stores in Australia. Individuals assigned to the second treatment group will see the products with the newly designed energy rating label.

Control condition: Individuals in the control group will always view the website in its current form, with no energy rating labels associated with products.

Outcome(s):  The primary outcome is customer engagement with the product, which will be measured by the rate at which customers click to view detailed information about specific test products from the product category (filter) pages.

Secondary outcomes will include: purchasing intent (measured by the rates at which customers click to add test products to their shopping cart), purchases (rates at which customers click to complete payment for test products), and interest in the energy rating label (clicks to view more information about the label).

Expected sample size: Approximately 13,000

Other:

Hiscox, Michael. 2017. Energy labels that make cents: A randomised controlled trial to test the effect of appliance energy rating labels. AEA RCT Registry. February 28.