Good Labeling Might Increase Green Light Bulb Sales

People may be willing to pay more for energy-efficient light bulbs if the overall energy costs are clearly stated on the label.

A new study shows that whether you think these bulbs are worth the extra cost may depend on how much you value saving today versus saving in the future.

“Lighting accounts for one fifth of US electricity consumption—and the vast majority of the upstream energy used to make light goes to waste, with only a small fraction being converted to light,” says Ines Azevedo, assistant professor of engineering and public policy at Carnegie Mellon University.
“Energy-efficient bulbs, like compact fluorescent lamps, or CFLs, can go a long way in saving energy and reducing harmful emissions.”
CFL bulb

image via Shutterstock

To understand the willingness to adopt these technologies, Azevedo and colleagues conducted a series of experiments with consumers.

“We used a mobile lab so we could meet people in a shopping area,” says engineering and public policy doctoral student Jihoon Min. “We invited them in and asked them to make several choices among alternative light bulbs.

“By testing bulbs of different type, price, brightness, power, color, and lifetime, and observing the choices people make, we can infer which aspects are most important to determining which bulb a consumer will buy.”

Energy-efficient bulbs are typically more expensive to purchase but cheaper to operate.

“The trick with energy-efficient bulbs,” says Jeremy Michalek, associate professor of mechanical engineering and of engineering and public policy, “is that the extra cost happens up front at the point of purchase, and the savings happen later with lower electricity bills.

“We found that consumers behave as though they value a dollar of savings today as much as only 15 cents of savings next year. When consumers value up-front savings so much more than future savings, efficient bulbs don’t look very attractive.

“But when we include the estimated annual energy cost on the label, consumers behave as though saving a dollar today is worth the same as saving 50 cents next year. They still prefer savings in the present, but they are more aware of future costs and give energy efficient bulbs more of a chance.”

Show Me The Money

The report, to appear in the journal Ecological Economics, suggests that new labels implemented by the Federal Trade Commission (FTC) in 2012, which include operating cost information, are likely to help increase adoption of efficient light bulbs. But all consumers are not the same.

“Lower income consumers are most sensitive to the timing of savings while high income consumers are more willing to invest now in order to save more money in the long run,” Azevedo says.

“So, it may be particularly challenging to persuade lower income households to invest, even when the rate of payback for these bulbs is higher than what could be earned in a bank account or the stock market.”

Energy cost labels appear to be an effective approach for informing consumers.

“We don’t see a significant connection between consumer knowledge of lighting technologies or perception of climate change in determining their choices,” Azevedo says. “But show consumers what it costs to operate these bulbs, and they are much more willing to invest in efficient technologies.”

The study was funded by the Russell Sage Foundation and the Climate and Energy Decision Making Center through a cooperative agreement between the National Science Foundation (NSF) and Carnegie Mellon.

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