Energy Policy 149 (2021) 112095

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Energy Policy
journal homepage: http://www.elsevier.com/locate/enpol

Information policies and biased cost perceptions - The case of Swedish

residential energy consumption
Thomas Broberg a, *, Andrius Kažukauskas b
a
Umeå School of Business and Economics, Department of Economics, Centre for Environmental and Resource Economics (CERE), Umeå University, Sweden
b
Faculty of Economics and Business Administration, Vilnius University, Lithuania

A R T I C L E I N F O A B S T R A C T

JEL classification: Households typically receive utility bills where all electricity use during a fixed period is lumped together. The
D12 lack of direct feedback in the form of marginal costs of using specific electric appliances potentially leads to
Q41 mistakes in households’ decision-making because of biased cost perceptions. In this paper, we test the commonly
Q48
held notion that lack of relevant energy-related knowledge results in cost underestimation of using electric
Keywords: appliances that may lead to over-consumption of energy. Contrary to this notion, our results show that less
Efficiency
knowledgeable energy consumers tend to have higher cost perceptions than others. This finding implies that less
Energy policy
Knowledge
knowledgeable energy consumers may consume too little of energy. We also find that a substantial share of the
Information sampled households, in particular less knowledgeable energy consumers, are less willing to receive relevant cost-
Perceptions free information about their energy use and costs. This finding suggests that poor energy-related knowledge may
Energy literacy not only be a matter of high information search and processing costs, but also a matter of consumers’ limited
attention capacity.

1. Introduction specific appliance. This lack of knowledge may result in an inefficient

There is a long debate in the energy economics literature concerning
the potential to cost-effectively improve energy efficiency through
market intervention (see reviews of the literature in e.g. Broberg and
Kazukauskas, 2015; Gillingham and Palmer, 2014; Allcott and Green­
stone, 2012; Sanstad et al., 2006; Sanstad and Howarth, 1994; Tieten­
berg, 2009). One suggested reason for the existence of such a potential is
that people have insufficient information and knowledge about the en­
ergy performance of home appliances. To address the problem of
incomplete information in investment decisions, many countries have
implemented informational policy instruments such as energy labeling
of electric appliances and energy performance certificates for dwellings
(Broberg and Kazukauskas, 2015).
Incomplete information also constitutes a problem in decisions
regarding the usage of home appliances, e.g. consumers for various
reasons may not have sufficient knowledge about the running costs of
appliances (Bull, 2012). In Sweden, the typical household receives one
or more utility bills monthly, or quarterly, where the electricity use of
multiple home appliances is lumped together. Therefore, it is difficult
for households to gather information about the marginal cost of using a
energy consumption among households. On an aggregated level, poli­
cymakers can address this inefficiency by designing policies that take
advantage of smart meters and other equipment to inform electricity
consumers about their own and other’s electricity use. To design effec­
tive policies, information about the presumptive knowledge gap, and
how to close it, is needed.
In this paper we investigate if incomplete knowledge affects people’s
perceptions of how much it costs to run specific appliances and if people
want to have more information about their own and other’s electricity
consumption. Several studies on European data find that many house­
holds lack basic knowledge about their energy use and that more literate
households are more likely to consume less electricity (Ameli and
Brandt, 2015; Blasch et al., 2019; Brounen et al., 2013; Trotta et al.,
2017).1 Previous research also suggest that many households have poor
knowledge about the price they have to pay when using electricity (Ito,
2014; Wichman, 2014) and show that individuals that pay more atten­
tion to their energy consumption level are more responsive to price
changes (Alberini et al., 2019).
It should be acknowledged that a household’s demand for energy is
derived from its usage of home appliances and that energy costs only

* Corresponding author. Umeå University, 901 87, Umeå, Sweden.

E-mail address: thomas.broberg@umu.se (T. Broberg).
1
See more detailed literature review on energy-related literacy in Filippini et al. (2019) and Trotta et al. (2017).

https://doi.org/10.1016/j.enpol.2020.112095
Received 20 December 2019; Received in revised form 4 December 2020; Accepted 6 December 2020
Available online 21 December 2020
0301-4215/© 2020 Elsevier Ltd. All rights reserved.
T. Broberg and A. Kažukauskas
partly determines the decisions related to purchasing and using these
appliances. Previous literature show that other factors may be more
influential on energy demand than marginal costs, e.g. socio-
demographics, attitudes, life-styles, habits and technologies (Gram-­
Hanssen, 2014). Energy prices and marginal costs are expected to play a
larger role for discretionary energy use, i.e. energy use that in different
ways can be altered and that lies above subsistence levels (Van Raaij and
Verhallen, 1983). In this paper we assume that the demand for energy
services are sensitive to changes in marginal costs and that policies that
correct biased cost perceptions therefore will have an impact on
household’s energy-related decisions. However, the size of the impact is
ultimately an empirical question that we will not address here.
It is often assumed and/or suggested in the previous literature that
lack of feedback and knowledge makes people underestimate the costs of
using appliances, and therefore consume too much energy (e.g. Sexton,
2015; Allcott, 2014). However, the notion that households in countries
with stringent energy and climate policies underestimate the cost of
using appliances has barely been tested empirically. We address this gap
in the literature by using Swedish survey data to test if less knowl­
edgeable energy consumers actually have lower cost perceptions than
others.
Biased perceptions of electricity costs may necessitate unconven­
tional policy actions aimed to correct the lack of sufficient energy-
related knowledge.2 Economic theory and empirical research provide
some guidance for policymakers to address the lack of relevant knowl­
edge (Gerarden et al., 2014). As an example, information programs
could target consumers who have biased beliefs and/or are inattentive
to energy costs. Some argue that certain behavioral biases are best
addressed with “nudges” that push people’s behavior in a pro-social
direction without restricting the choices available to them (Thaler and
Sunstein, 2008).3 Recent research suggests that more detailed infor­
mation on household electricity use and social norms can be a powerful
instrument to influence people’s energy-related behavior (e.g. Delmas
et al., 2013; Allcott, 2011).4
We contribute to the literature by more generally investigating
whether households want to receive information that may help them to
adjust their own perceptions and beliefs about energy costs. We also
investigate heterogeneity among households to find out whether people
with poor knowledge about their energy use are more willing to receive
customized information than less knowledgeable persons. This allows us
to uncover the potential reasons why certain households want to stay
less knowledgeable about their energy consumption. It has been sug­
gested that in the presence of constraints on people’s cognitive abilities,
a person may choose to stay ignorant about the running costs of their
home appliances just because the (opportunity) costs of their attention
are too great even conditional on being provided with costless and easily
2
There is empirical evidence that people’s perceptions are sometimes sys­
tematically biased not only in an energy use-related context but also in other
common everyday activities. For example, people tend to overestimate the cost
of water (Brent and Ward, 2018), the calories in drinks and underestimate the
calories in food (Bollinger et al., 2011), or investors tend to have biased per­
ceptions on financial risks and returns (Kaplanski et al., 2016).
3
Policies addressing behavioral failures are referred to as libertarian, soft,
light, or asymmetric paternalism in the literature. Loewenstein and Haisley
(2008) discuss different welfare measures and conclude that “light paternalistic
policies should only be put into play when welfare judgements tend to be
relatively straightforward.” They label this approach an “imperfect but prag­
matic approach.” According to this approach, it is important to define what type
of behavior really is pro-social, which is a difficult task.
4
See more detailed literature review in Ramos et al. (2015).
2
Energy Policy 149 (2021) 112095
available information (Sallee, 2014; Sims, 2003).5 If so, high informa­
tion gathering and/or other transaction costs may not be the only reason
why people choose to stay uninformed.
In our empirical analysis, we use Swedish survey data concerning
households’ knowledge about their own energy consumption, cost per­
ceptions and willingness to receive relevant cost-free information. First,
we explore consumers’ cost perceptions for using energy-consuming
appliances; then we explore if these perceptions differ between house­
holds with varying levels of energy-related knowledge; and finally, we
investigate whether households want to receive information that may
presumably help them to become more knowledgeable, so they could
update their cost perceptions and energy use.
Contrary to the common expectation of underestimated costs for
using energy intensive appliances among households, our results show
that respondents defined as less knowledgeable tend to have higher cost
perceptions than others. This finding implies that less knowledgeable
consumers overestimate the costs of consuming electricity and hot
water, which may lead to too little energy consumption among these
consumers. Moreover, we find that less knowledgeable electricity con­
sumers are also less willing to receive cost-free customized information.
This finding indicates that limited attention may be one reason to why
people lack knowledge about their everyday occurring energy-related
costs.
The outline of this paper is as follows. In Section 2, we present a
theoretical framework that helps to map how energy use are related to
cost perceptions, energy-related knowledge (or energy literacy) and
‘moral costs’ of using energy. In Section 3, we outline our empirical
strategy. In Section 4, we present the survey, describe the data, and
present the results of our econometric analysis. Section 5 includes a
discussion of our results and provides policy implications. Finally, Sec­
tion 6 concludes.
2. Theoretical framework
In this section, we briefly present a conceptual framework developed
by Brent and Ward (2018) and Allcott and Kessler (2019). This frame­
work will conceptually enable us to separate the information provision
effects of two very different motives to save energy: pro-social or
pro-environmental attitudes and financial incentives (based on updated
cost perceptions). Unlike previous research documenting the relation­
ship between knowledge or information provision and energy savings,
our focus is on the relationship between knowledge about electricity use
and consumers cost perceptions, which are key to sound financial de­
cisions. By focusing on this relationship, we investigate the underlying
financial motive to save energy (rather than pro-social motives). The
framework is consistent with the formulations in Sexton (2015) and
Wichman (2017) who model price (and quantity) mis-perceptions.
We start by assuming that consumers with income y derive utility
from consuming a numeraire good x and e, which in our application is
energy use. Let e generate consumption utility of f(e; α), where α cap­
tures consumer tastes as a demand shifter. We assume standard dimin­
′
ishing marginal utility so f is positive and f is negative. We assume that
′ ′
the perceived costs γ̃ pe differ from actual costs of using electric appli­
ances pe, where p and e are the actual price and quantity of used elec­
tricity, respectively, and ̃ p is the perceived price. The parameter γ > 0
captures misperceptions of how much energy electric appliances
consume. If γ deviates from unity, it implies a consumption inefficiency,
e.g. if γ < 1 it implies that an individual believes that her energy use and
related costs are lower than what they actually are and therefore
5
Another explanation of inattention, also based on rational choice, is the one
of strategical ignorance and strategical self-ignorance which suggest that people
may deliberately ignore information that are expected to affect their utility
negatively, e.g. by generating feelings of guilt (Dana et al., 2007; Thunström
et al., 2016).
T. Broberg and A. Kažukauskas
consume too much energy relative to the private optimum. To sum up,
both biased perceptions of energy prices and energy use can cause
consumption inefficiencies.
The model also includes a “moral utility” term M = m − μe.
Following Levitt and List (2007), moral utility arises when actions are
subject to social norms. The moral price μ can be thought of as a “moral
tax” on consumption of e, as in Glaeser (2014). For example, peer
comparison may cause negative emotions, such as anxiety and un­
pleasant pressure.
The individual maximizes
̂
max U(θ) = x + f (e; α) + m − μe
x,e
subject to the budget constraint:
y = x + γ̃
pe
where θ = {y, α, γ, m, μ} is a vector of individual-specific characteristics.
The individual’s equilibrium choice of e, is determined by the
following first-order condition:
′
f (e; α) = μ + γ̃
p
Total differentiation of Equation (3), solving for the change in energy
use (de), gives the expression in Equation (4) that relates a change in
energy consumption to changes in perceived prices, energy-related
knowledge (or inattention) and moral cost.
1 Swedish population have access to the Internet (for discussion see San­
de = pdγ + dμ + γd̃
[̃ p]
f ′′ ()
We assume that the provision of different information and knowl­
edge potentially can affect energy consumption in three ways: (1) trough
moral costs (μ); (2) by correcting price perceptions (̃ p) and (3) by
improved energy-related knowledge (γ). In our study, we are specifically
interested in two commonly used information treatments to affect en­
ergy use: (i) social comparisons of energy use with other similar
households (to increase moral costs, μ); (ii) more information about
households’ own energy use and information provisions of the actual
electricity operating cost of electric appliances (to correct cost percep­
tions, γ̃
pe).
Social comparisons persuade people to reduce their energy con­
sumption by activating moral utility, i.e. higher “moral costs” μ. This
means that comparison information alluding to social norms should
decrease energy consumption by de = f ′′1(.) [dμ]. Meanwhile, providing
households with actual costs of using electric appliances or other in­
formation to increase their knowledge basis may help households to
update their cost perceptions. If such information does not affect moral
utility (M), we can expect that the effect of such information interven­
tion will change energy consumption by de = f ′′1(.) [̃
pdγ + γd̃
p], where the
expected change in consumption depends on the initial price percep­
tions and energy-related knowledge. If consumers were initially over­
estimating prices (d̃p < 0) and/or have perception that electricity
appliances use less energy that they really do (γ < 1) then providing
them with relevant information increases energy consumption. If con­
sumers were initially underestimating prices (d̃ p > 0) and/or have
perception that electricity appliances use more energy than they really
do (γ > 1) then providing them with relevant information reduce energy
consumption.
In the empirical section of this paper, we test if better-informed
households with more knowledge about their energy use have lower or
higher cost perceptions (γpe).
̃ If, indeed, better informed households
have higher cost perceptions than less knowledgeable households for
using electric appliances that imply that providing less knowledgeable
households with more information and knowledge will lead to higher
cost perception and lower energy consumption. The alternative hy­
pothesis is that less knowledgeable persons have higher cost
Energy Policy 149 (2021) 112095
perceptions, and that information that correct this bias likely will result
in higher energy consumption given that the information does not
activate pro-social norms (moral utility).
3. Data and empirical strategy
The empirical analysis is based on Swedish survey data collected in
June 2014. The survey was part of a research program concerning
households electricity consumption and demand flexibility. The survey
included questions about: the respondents’ socio-economic status;
behavior and attitudes related to residential energy consumption;
(1)
knowledge about the electricity market; and knowledge about their own
use of electricity. The survey also included a section with questions
related to a choice experiment on demand flexibility.6
The survey was sent to a random sample from a probability based
(2)
online panel with 90 000 adult members (managed by Norstat).7 Around
5900 panel members was invited to the survey, and 918 of them
responded within a week. The respondents were collected according to
age, gender and place of residence to be representative for the Swedish
population. Ahead of the final survey a pilot study with 100 respondents
(3) was conducted to test questions, layout, etc. The choice to use an
internet-based survey was based on the advantage of being less costly,
more flexible and less time-demanding in data collection than a tradi­
tional mail survey.8 We have no reason to believe that internet surveys
based on probability sampling causes more problems in the data
collection procedure than other survey modes as the vast majority of the
(4)
dorf et al., 2020). In our sample, the average age is 55 years, 40% of the
respondents are retirees, 42% lives in apartments and 13% have children
in ages 0–12 years. In our sample we have a slight overrepresentation of
men (55%).
As mentioned above, the questionnaire included questions relating
to knowledge about energy use. Among other things, we asked the re­
spondents about cost perceptions and willingness to receive customized
information. Concerning cost perceptions, we asked the respondents to
state the expected cost for three energy-consuming activities: running a
dishwasher (running a standard program for 2 h), using an electric oven
(using it for 1 h at 200 ◦ C) and taking a hot shower for 5 min (at a water
temperature of 37 ◦ C and using a normal shower head).9,10 The first two
activities were chosen because they are high-powered and frequently
occur in peak demand hours, i.e. when demand flexibility has the
6
For details about the choice experiment and results concerning demand
flexibility, see Broberg and Persson (2016).
7
People can only become panel members by invitation and new members are
recruited based on randomized samples from national registers. All panel
members answer several questions about demographic and socio-economic
variables, which are used for quota sampling. The panel is actively managed,
e.g. members that do not answer surveys continuously are replaced. For each
survey, a generic e-mail, with no indication about the topic of the survey, are
sent to a random sample of panel members. Typically, the company will send
out one reminder in the case of a non-response.
8
One advantage that we took advantage of was to restrict the respondents so
that when answering the survey they were not allowed to go back and revise
their answers to previous questions.
9
To limit the burden on respondents, we chosed not to ask about cost per­
ceptions for more than three activities. However, we expect the results to be
generelizable to a broader set of activities, e.g. dryers and washing machines.
10
To avoid a wide variation in the type of usage people would think of when
stating their cost-stimates, we conditioned the question on duration and, when
applicable, temperature. In the case of showering, we also conditioned on a
normal shower head, explicitelly telling the respondents not to think about
shower heads that consume extraordinarily little or much water. In this context,
it is important to realize that Sweden is a water aboundant country where the
discussion about water shortage only recentlly have occurred. Therefore, most
households were expected to easily understand the referece to an ordinary
shower head. The actual survey questions are provided in Appendix A.
3
T. Broberg and A. Kažukauskas
highest value for the power system, and because most Swedish house­
holds have an electric oven and many have a dishwasher (Zimmermann,
2009). The third activity, showering, was chosen to contrast the other
two activities by being less of a necessity and more broadly relate to
energy use, i.e. not only to electricity consumption. All three activities
are subjects to habits and daily routines but where it, to varying degree,
is possible to change the frequency, duration and timing of their
occurrence. It may also be possible to affect the energy use per activity,
e.g. by cooking more effectively by wasting less heat, running an
eco-program on the dishwasher, or saving hot water by using a
water-saving shower head or lower the water temperature.
In order to avoid anchoring effects, we did not use predetermined
choices for answers as commonly done in previous studies on cost per­
ceptions. Instead, we asked the respondents to state intervals. Also,
stating exact values would be a more difficult task for the respondents.
Based on the responses to the survey questions we first investigate
whether people who tend to be knowledgeable have different percep­
tions about costs of using home appliances than others. Because of the
interval nature of the data, we apply an interval regression model11 to
estimate the links between knowledge and cost perceptions. It should be
pointed out here that people may have different cost perceptions
because of slight variations in energy prices or energy performance of
appliances. As we have no information about the respondents’ true en­
ergy prices and the energy performance of their appliances, we cannot
test if there exist a systematic difference in this respect between
knowledgeable and less knowledgeable respondents. In our line of
reasoning we assume that energy prices and the energy performances of
home appliances on average are the same, or at least not very different,
for the two groups.
We also use the survey data to study if the respondents want more
information. We run a probit model to explore the relationship between
the willingness to receive different types of information and electricity
bill-related knowledge. If lack of energy-related knowledge among re­
spondents negatively correlates with their willingness to receive knowl­
edge enhancing information, this will indicate that people may want to
stay less knowledgeable due to limited attention issue. However, if it is
positively correlated it means that high transaction (search) costs is a
better explanation to why people tend to stay uninformed about their
energy using activities.
As the lack of energy-related knowledge is not a clearly observable
characteristic of energy consumers, proper indicators are needed. We do
not single out one specific indicator but instead investigate three in­
dicators based on the answers to the following questions: first, whether
they do not have an idea about the price of electricity, second, whether
they do not have an estimate about how much electricity they consume
annually, and whether they do not know the type of their electricity
contract (i.e. whether they signed for fixed or variable electricity price).
Thus, the proxies for the lack of energy-related knowledge consist of
three dummy variables taking value 1 if respondent states he/she “does
not know” answer to the above-listed questions, and 0 otherwise.12
In order to have an aggregate value for the lack of energy-related
knowledge, we create two knowledge indices based on the above-
defined indicators. For constructing our first index, we simply add up
all three binary indicators for lack of knowledge in a similar fashion as it
is done in a similar study on home audits done by Palmer and Walls
(2015). The sum of our three dummy indicators ranges between 0 and 3.
Thus, we consider 0 as indication for more knowledgeable respondent, 3
as indication for least knowledgeable types of respondents, and the rest
lies in between these two types of respondents. For the second index we
employ a factor analysis. The relationship between our three indicators
11
Interval regression model is a generalization of the Tobit model. Interval
regression model can fit models for data where each observation represents
interval data, left-censored data, right-censored data, or point data.
12
The actual survey questions are provided in Appendix A.
4
Energy Policy 149 (2021) 112095
for lack of knowledge is complex, and although the survey questions
allow us to assess the respondents’ specific knowledge and awareness
about some energy use, there exist other factors explaining common
traits of knowledge, which cannot be directly captured. Given this
complexity, we construct an energy knowledge index by employing
factor analysis (FA). FA operates on the notion that multiple observed
variables have similar patterns of responses because they are all asso­
ciated with a not directly measured (latent, underlying) variable. FA
examines all pairwise relationships between individual variables – all
our indicators for lack of knowledge – and extracts latent factors from
the measured variables.
The first factor extracted has the strongest explanatory power of the
variation, while the second main factor has inferior explanatory power,
and so on. The eigenvalue measures how much of the variance of the
observed variables a factor explains. Given our data, the first factor is
retained as the ‘index No 2’.
The correlation matrix of all key variables (including underlying
indicators), the relationship of each knowledge indicator to this un­
derlying factor, which is expressed by the so-called factor loading, and
extracted factors with their eigenvalues can be found in Tables B1, B2
and B3 in Appendix B, respectively. From Table B1 we see that, as we
expected, all our indicators are positively loaded. Our index No 2 is
mainly loaded by the lack of idea about their household electricity use
(in kWh), less by their knowledge on prices and their contract type.
Summary statistics of all indicators, both indices and other control
variables, with brief descriptions of each variable are presented in
Table 1.
4. The results
Fig. 1 shows the distribution of perceived costs for using specific
home appliances and taking a shower. First, we asked the respondents to
state the expected costs of using a dishwasher (2 h) and an electric oven
(1 h). Second, we asked the respondents to estimate the cost of taking a
hot shower for 5 min. As shown in Fig. 1, the range of estimated costs
shows high variation and fall in the same range for all three activities.
This suggests that the issue of poor knowledge about relatively small and
discreet costs are not confined to the electricity domain. In general, the
results of the survey suggest that many households base their decisions
regarding energy use on poor knowledge (giving wide intervals of their
perceived costs) and that people on average perceive energy-related
activities as more expensive than they really are.13,14
In our analysis of the relationship between lack of knowledge and
perceived electricity-related costs, we categorize respondents as being
(1) more knowledgeable and (2) less knowledgeable. Fig. 2 illustrates
how cost perceptions differ between these two categories of people,
defined by our three indicators. A consistent pattern emerges that less
knowledgeable persons estimate higher perceived costs of using elec­
trical appliances and taking a shower. To see if this pattern holds for our
two indices when controlling for socio-economic factors, we employ an
interval regression model. The results from the estimation are presented
in Table 2.15
13
Our benchmark for “correct” costs of using the selected home appliances
(about SEK 3 for each activity) are based on Vattenfall’s online energy cost
calculator “Stora Elräknaren”.
14
However, our result, that people on average perceive energy-related ac­
tivities as more expensive than they really are, is somewhat expected as the
costs we ask about are small and costs perceptions are bounded from below. We
partially address this issue in our analysis on the relationship between knowl­
edge and cost perceptions by employing interval regression and by using
truncated regression as our robustness check.
15
Here we present our results for using indices to value for the lack of energy-
related knowledge among households. The results of the effects of each
knowledge indicator on cost perceptions are presented in Appendix C.
T. Broberg and A. Kažukauskas Energy Policy 149 (2021) 112095

Table 1 Table 1 (continued )

Descriptive statistics of the variables of interest. Variable Obs. Mean Std. Min Max
Variable Obs. Mean Std. Min Max Dev.
Dev.
shower for 5
Indicator_1 respondent 918 0.557 0.497 0 1 min, in SEK
NOT knowing Age age 918 54.793 16.788 18 85
the price of Woman gender of 918 0.452 0.498 0 1
electricity per respondent
kWh Hh_size self-reported 914 2.177 1.099 1 8
Indicator _2 respondent 918 0.377 0.485 0 1 household size
NOT knowing Direct_el_heat direct electric 906 0.146 0.353 0 1
their heating
household Income_hh household 855 8.227 3.705 1 16
annual energy income index
use quantities based on self-
in kWh reported
Indicator _3 respondent 918 0.107 0.309 0 1 income
NOT knowing intervals
the nature of Higher_edu university 918 0.321 0.467 0 1
their electricity education or
contract equivalent of
Index_1 summation of 918 1.04 0.987 0 3 more than 3
the three years
binary Comparison respondents 918 0.423 0.494 0 1
inattention willing to
indicators receive
(0–3) information on
Index_2 index from 918 0.366 0.355 0 1.012 similar peers’
factor analysis use of
of the three electricity
binary Past respondents 918 0.662 0.473 0 1
inattention consumption willing to
indicators receive more
L_bound_dish lower bound of 842 6.199 10.906 0.01 100 detailed
perceived cost information on
of running their own past
dishwasher for use of
2 h, in SEK electricity
U_bound_dish upper bound of 836 9.633 14.186 0.01 100 Appliance use respondents 918 0.597 0.491 0 1
perceived cost willing to
of running receive
dishwasher for information on
2 h, in SEK the electricity
Average_dish average 828 7.825 11.670 0.01 100 cost of running
perceived cost their
of running appliances
dishwasher for
2 h, in SEK
L_bound_oven lower bound of 856 6.279 10.602 0.01 100 The results confirm the initial descriptive analysis that less knowl­
perceived cost edgeable respondents generally have higher perceived costs than others
of using oven
do. This result is insensitive to a number of robustness checks,16 e.g. (1)
at 200 ◦ C for 1
h, in SEK different model specifications,17 (2) whether we use lower bound
U_bound_oven upper bound of 853 9.347 13.465 0.02 100 instead of intervals as dependent variable,18 (3) different assumptions
perceived cost
of using oven
at 200 ◦ C for 1
h, in SEK 16
The summary table of all the robustness checks are presented in Appendix
Average_oven average 842 7.654 11.069 0.02 100
perceived cost D. All detailed results of our robustness checks can be provided upon request.
17
of using oven We have tried to use a range of different covariates to control for education,
at 200 ◦ C for 1 incomes and other socio-economic conditions, and we also used the knowledge
h, in SEK indicators instead of our constructed indices. All our considered model speci­
L_bound_shower lower bound of 858 5.009 10.558 0.01 100 fications show the significant and positive relationship between cost percep­
perceived total tions and knowledge basis.
cost of taking a 18
One may argue that the lower bound is a better measure of perceptions than
hot shower for
a midpoint in the range provided by respondents as the midpoint may be
5 min, in SEK
U_bound_shower upper bound of 856 7.473 12.723 0.02 100
significantly influenced by an extreme upper bound.
perceived total
cost of taking a
hot shower for
5 min, in SEK
Average_shower average 845 6.049 10.390 0.02 100
perceived cost
of taking a hot

5
T. Broberg and A. Kažukauskas
Fig. 1. Histograms for cost perceptions of using common home appliances: (a) the perceived cost of running a common dishwasher for 2 h, (b) the perceived cost of
using a typical electric oven for 1 h, and (c) the perceived cost of taking a shower for 5 min.
about the distribution of the error term,19 and (4) sample restrictions20.
The finding that more knowledgeable persons tend to have lower cost
perceptions than less knowledgeable consumers divert from the as­
sumptions and findings in Gilbert and Graff Zivin (2014) and Sexton
(2015). We find that the difference between the least knowledgeable and
the most knowledgeable respondents is about SEK 3.3–6.4 depending on
activity. In the analysis, we consider the following socio-economic
variables: age, household size, gender, and an indicator of whether the
household’s heating system mainly consists of electric radiators. We find
19
Interval regression assumes that the data come from a normal distribution.
We did a robustness check for this assumption by using a range of other
distributional assumptions (log-logistic, log-normal, and gamma type of
distributions).
20
As a robustness check we restricted our sample to only include single-person
households. It could be that within a household, persons have different roles
and the one that may be responsible for paying the bills may not control the
usage of household appliances. In a single-person household, the same indi­
vidual pays the bills and control the usage of appliances. The result from this
robustness check supports our main results. The detailed results of the robust­
ness checks can be provided upon requests.
6
Energy Policy 149 (2021) 112095
that perceived costs decrease with age (about SEK 0.04–0.09 per year).
The result mean that cost perceptions differ with about SEK 1–2 between
persons that differ 20 years in age. Females on average perceive the
running costs about SEK 0.5–1.8 higher than males. It is difficult to point
to a solid reason for these findings, but as for the age and gender effect,
one can speculate that it might be that younger people and females on
average know less or are more uncertain about technical energy issues.21
As an example, Brounen et al. (2013) find higher scores of energy lit­
eracy and energy awareness among male respondents. In addition, it has
been found in previous research that females on average are more risk
averse than men (see e.g. Borghans et al., 2009). It seems like a
reasonable hypothesis that a risk averse consumer as a mean to handle
uncertainty and avoid high electricity bills presume that the costs of
21
An anonymous reviewer of this paper suggested that systematic differences
in the interpretation of the questions possibly can explain the differences that
we find, e.g. certain age groups and females may have thought of costs in a
broader sense than others and included environmental costs. However, we do
not believe this to be very likely. First, the survey was tested in focus groups
with no indication of such differences. Second, the survey did not include
questions or information about environmental impacts that could have
encouraged respondents to think about external costs. Third, the questions
about cost perceptions were asked directly after several questions about char­
acteristics of the respondent’s residence and electricity contract, and in the cost
perception questions, the respondent was encouraged to think about his/her
personal circumstances.
T. Broberg and A. Kažukauskas
Fig. 2. Box plots for the perceived costs of running appliances. Results presented for three different energy-related knowledge indicators.
using appliances are high.22 Household size also plays significant role in
explaining the cost perceptions. Additional member in the household is
associated with higher cost perceptions between 0.9 and 1.5 SEK
depending on activity.
Our finding that many respondents, in particular less knowledgeable
ones, have higher and likely more biased perceptions about energy-
related costs than others do raises the question of whether customized
information campaigns would be beneficial to them. We address this
22
We also used other socio-economic variables, such as income and education.
We find that high-income respondents and those with university education do
not have significantly different cost perceptions than others. This finding is in
line with the results in Attari et al. (2010), who find that income and education
are not reliable predictors of perceptions of energy saving activities. In order to
have parsimonious models and because we have no solid theoretical reason to
believe that income or education would be a significant factor in shaping the
cost perceptions, we have excluded these variables from our final models.
7
Energy Policy 149 (2021) 112095
question by directly asking people whether they wish to receive infor­
mation that (i) compares their energy use with other similar households,
(ii) compares their energy use with their own past consumption, and/or
(iii) highlights the operating cost of electric appliances.
We find that the majority of respondents are in favour of receiving
more detailed information about their own energy use, but also that they
are not as enthusiastic about getting information about the energy use of
similar households. Next, we investigate the potential reasons why
people want, or do not want, specific types of information. Among other
reasons, lack of knowledge may be generally explained by high costs for
acquiring such knowledge (transaction costs) and bounded cognitive
abilities. However, to understand better what kind of reasons are behind
persistent lack of knowledge we associate our variables for lack of
knowledge with willingness to receive such knowledge. If less knowl­
edgeable respondents are more willing to update their knowledge about
their energy use that would suggest that transaction costs of finding such
information is an important explanation to why someone is less
T. Broberg and A. Kažukauskas Energy Policy 149 (2021) 112095

Table 2
The effects of lacking energy-related knowledge (Index_1 and Index_2) on respondents’ perception of (1) the cost of running a common dishwasher for 2 h, (2) the cost
of using ordinary oven for 1 h, and (3) the costs of taking a hot shower for 5 min.
Variable/Model dishwasher oven shower dishwasher oven shower

(1) (2) (3) (4) (5) (6)

Index_1 2.3750*** 1.9050*** 1.2224*** – – –

(0.4813) (0.4668) (0.4271) – – –
Index_2 – – – 6.4049*** 5.3699*** 3.2884***
– – – (1.3765) (1.3306) (1.2133)
Age − 0.0422* − 0.0487* − 0.0929*** − 0.0422* − 0.0470* − 0.0929***
(0.0253) (0.0258) (0.0280) (0.0256) (0.0259) (0.0281)
Womana 1.8078** 0.5639 1.5328* 1.8349** 0.5554 1.5515*
(0.8954) (0.8093) (0.8254) (0.8981) (0.8100) (0.8296)
Household size 1.2156** 0.9224* 1.5025*** 1.2332*** 0.9446* 1.5117***
(0.4739) (0.5067) (0.4857) (0.4751) (0.5075) (0.4852)
Dir_el_heata 0.4097 1.5619 0.3210 0.4454 1.6075 0.3351
(0.9557) (1.0937) (0.8273) (0.9560) (1.0933) (0.8299)
Constant 4.1403** 5.9018*** 6.0021*** 4.1959** 5.7634** 6.0367***
(1.9804) (2.2681) (2.2101) (2.0073) (2.2795) (2.2115)
Observations 837 854 856 837 854 856

Note: robust standard errors in parentheses; ***p < 0.01, **p < 0.05, *p < 0.1.
a
Indicates dummy variable.

knowledgeable in the first place. However, if less knowledgeable re­
spondents do not want to have more information, bounded rationality,
difficulty to process information or other reasons may be a better
explanation.
Fig. 3 shows that there are differences between less and more
knowledgeable respondents regarding the willingness to receive infor­
mation. For understanding better how energy-related knowledge and
other factors can possibly be associated with the (un)willingness to
receive information on private energy use, an econometric analysis
based on probit models is performed. The results are presented in
Table 3 and show that less knowledgeable respondents are less willing to
receive additional information about their actual and relative use of
electricity and the costs of running appliances.23 For example, knowing
less by one of our knowledge indicators decreases the probability of
being willing to receive information related to energy use with about
6–12 percent depending on information type. In our probit model, we
control for several variables: age, sex, having direct electric heating,
education and income. We find that age reduces the probability that
someone is willing to receive information by between 0.28 and 0.45
percent per additional year depending on type of information. It can also
be seen that the probability that someone is willing to receive infor­
mation about the energy use of specific appliances increases by 10
percent if the respondent is a female. Interestingly, the probability that
someone is willing to receive comparative information is about 10
percent higher for respondents that lives in homes with direct electrical
heating, i.e. respondents that use relatively much energy when
compared to people living in houses with more efficient heating systems.
Finally, more educated respondents are more willing to receive infor­
mation about both their own and peers’ energy consumption (proba­
bility is around 7 percent higher compared to respondents without a
higher education).
5. Discussion
In this paper we use a survey method to investigate if people that are
less knowledgeable about their energy use have different beliefs about
the cost of using energy intensive home appliances. Because we have no
information about each respondents’ true energy prices or the energy
23
Here we present our results for using indices to value for the lack of energy-
related knowledge among households. The results of the effects of each
knowledge indicator on willingness to receive information are presented in
Appendix E.
performance of their appliances, we cannot directly test if running costs
are over or underestimated. However, under the assumption that the
more knowledgeable respondents have more reasonable cost-
perceptions on average, any difference between the groups would
point in the direction of misperception on behalf of the less knowl­
edgeable respondents. Further, the cost-perceptions of both groups can
be compared with objective benchmarks for the cost of running specific
appliances, to tentatively conclude on the correctness of the cost-
estimates.
Contrary to the common expectation in the previous literature that
people underestimate costs for using home appliances, our results show
that respondents defined as less knowledgeable tend to have higher cost
perceptions than others. If the demand for using home appliances is
sensitive to running costs, our finding implies that providing less
knowledgeable consumers with pure information about the cost of using
home appliances (i.e. without any normative messages), is likely to in­
crease their energy use. However, this does not mean that information
policies that aim to accomplish energy savings in the residential sector
are ineffective (or even counterproductive). Information may work
through several channels such as making people pay more attention to
their energy use or alluding to social norms. Previous literature that
study household’s actual electricity consumption suggests that house­
holds that, for different reasons, pay less attention to their electricity
consumption or electricity bills tend to consume more electricity than
others (Alberini et al., 2019; Sexton, 2015). Our finding suggests that
information that correct biased cost perceptions may not effectively
address the issue of inattention (e.g. caused by automatic bill payment).
In this study we are not able to investigate why less knowledgeable
people tend to have higher cost perceptions than others. However, one
tentative explanation of this seemingly surprising result may be that less
knowledgeable consumers to larger extent fail to differ between the
average and marginal price of electricity which may be quite substantial
if the electricity bill includes a fixed electricity network charge (as was
the case in Sweden, 2014).24 It can also be that the lack of knowledge
makes people uncertain about the cost of using electric appliances, and,
as a mean to handle this uncertainty and avoid high energy bills, con­
sumers presume that the costs of using appliances and taking showers
are high.
It must be acknowledged that the running costs of specific home
appliances varies between households and that any systematic
24
Ito (2014) find evidence that electricity consumers react to average price
than marginal price and consequetly behave suboptimally.

8
T. Broberg and A. Kažukauskas Energy Policy 149 (2021) 112095

Fig. 3. The share of respondents willing to receive information on: (a) comparison of their neighbour electricity use, (b) their past electricity use, and (c) cost details
for using electric home appliances. Results presented for all three knowledge indicators.

Table 3
Marginal effects of energy-related knowledge proxies (Index_1 and Index_2) explaining willingness to receive certain information (six probit models).
Variable/Model willing to receive information on

Comparison Past consumption Appliance use Comparison Past consumption Appliance use

(1) (2) (3) (4) (5) (6)

Index_1 − 0.0604*** − 0.1284*** − 0.0746*** – – –

(0.0197) (0.0186) (0.0194) – – –
Index_2 – – – − 0.1500*** − 0.3427*** − 0.1953***
– – – (0.0548) (0.0515) (0.0539)
Age − 0.0046*** − 0.0028*** − 0.0046*** − 0.0045*** − 0.0028*** − 0.0045***
(0.0012) (0.0011) (0.0012) (0.0012) (0.0011) (0.0012)
Womana 0.0335 − 0.0554 0.1097*** 0.0310 − 0.0563 0.1081***
(0.0361) (0.0342) (0.0351) (0.0361) (0.0343) (0.0351)
Household size 0.0001 − 0.0099 0.0021 − 0.0005 − 0.0117 0.0012
(0.0187) (0.0181) (0.0190) (0.0187) (0.0181) (0.0190)
Dir_el_heata 0.1013** 0.0713 0.0591 0.1016** 0.0693 0.0588
(0.0498) (0.0445) (0.0476) (0.0499) (0.0446) (0.0476)
Income_hh 0.0012 0.0057 0.0020 0.0014 0.0061 0.0022
(0.0054) (0.0052) (0.0054) (0.0054) (0.0052) (0.0054)
Higher_educationa 0.0775** 0.0709** 0.0366 0.0783** 0.0723** 0.0375
(0.0379) (0.0346) (0.0371) (0.0379) (0.0345) (0.0371)
Observations 847 847 847 847 847 847

Note: robust standard errors in parentheses; ***p < 0.01, **p < 0.05, *p < 0.1.
a
Indicates dummy variable.

difference between the above-mentioned groups that affects the stated
cost-perceptions will reduce the strength of our results. However, there
at least two reasons why we believe that such a difference, if it exists, is
less of a problem for the interpretation of our main results. First, making
the connection between actual costs and cost perceptions requires in­
formation that per definition would make the respondents knowledge­
able. Second, the spread of cost-perceptions among our respondents
cannot reasonably be explained by the spread in true running costs.
Furthermore, we find that less knowledgeable electricity consumers
are less willing to receive cost-free customized information. This result is
in line with the findings of Palmer and Walls (2015), which focus on
homeowners’ willingness to receive information in the form of home
energy audits. Based on responses from U.S. homeowners, the study
finds that the effect of being less knowledgeable about energy-related
issues significantly lowers the probability of having such an audit
(another type of information).25
Why do households choose not to acquire information that would
help them to update their cost perceptions? One reason can be that the
cost for gathering such information is high. Another reason may be time
constraints and limited cognitive abilities that cause people to,
consciously or unconsciously, pay little attention to some daily routines
that have not constituted a major problem for them in the past. In the
presence of time constraints and/or constraints on people’s cognitive
abilities, a person may choose to stay ignorant about the running costs of
their home appliances because the (opportunity) cost of paying atten­
tion and processing the information is too large. In any case, one can

25
Mandating home owners to have a detailed energy audit may still have a
limited effect on investments in energy efficiency measures (Broberg et al.,
2019).

9
T. Broberg and A. Kažukauskas
argue that more and better information hardly can make anyone worse
off if people can choose to stay ignorant and not having to experience
costs of processing such information. However, things may be different
with information that convey a normative message.
Yet another reason why households choose not to acquire informa­
tion to update their perceptions could be so-called subsistence con­
sumption, i.e. a minimum consumption level of a necessity (Sharif,
1986). Nowadays some services provided by energy-using appliances
are part of our daily routines and habitual behavior and seen as neces­
sities. Therefore, below some minimum consumption level, individuals
regard energy services as an absolute priority without considering
trade-offs with other goods, i.e. irrespective of perceived cost/prices for
these services. Subsistence levels certainly exist for energy usage for
cooking, showering and perhaps also for dishwashing. However, in this
paper, we study households in a high-income society, and as such,
mainly target consumption above subsistence levels. Such supernu­
merary consumption in our case mean that households may run
half-filled dishwashers, run an intensive dishwasher program, shower
longer and warmer than necessary for minimum hygiene or have the
oven running empty longer than necessary. Even if habits and daily
family caring routines play a fundamental role also for supernumerary
consumption, we believe that it is not completely insensitive to marginal
costs. Therefore, if biased cost perceptions are corrected, the residential
energy use will increase. We also believe that our results can be gener­
alized to a broader set of high-powered appliances, such as dryers and
washing machines, which increases the relevance of this study for pol­
icymaking. It will remain an open question, however, to what degree the
results are applicable to high-powered appliances such as
air-conditioners and heat pumps that in many countries may be more
important from a power system perspective. Such appliances contribute
relatively much to the overall energy cost in households that have them
and may therefore receive more attention.
In our survey study, almost half of the respondents expressed a
negative opinion about the possibility of being compared with peers.
This is consistent with our conceptual model that considers “moral cost”
of activating social norms via social comparison. Our result is in line
with the recent finding by Allcott and Kessler (2019), who carry out a
comprehensive welfare evaluation of sending home energy conservation
reports. They conclude that such information campaigns can have
detrimental effects on overall welfare gains of such policies. In their
study, some households stated a negative willingness to pay for
receiving more customized information. Furthermore, Broberg and
Persson (2016) use the same survey dataset as we do and find that
people in Sweden on average require an economic compensation to
opt-in to a peer comparison program concerning their electricity use.
However, it is important to highlight that survey studies in general relies
on self-reported data and responses to hypothetical scenarios, e.g. about
information provision. Previous research suggests that there may be a
substantial divergence between people’s stated and preferences revealed
from observed behavior (Loomis, 2014).
As for future research in this area, it seems necessary to investigate
further to what degree the unwillingness to receive information trans­
lates into disutility if customized energy-related information is forced on
households (for example, by sending peer comparison information with
their utility bills without the consent of household). It is also important
to investigate why people get negatively affected by such information, e.
g. by further investigating the role of strategical ignorance and social
pressure.
6. Conclusions and policy implications
Improving the overall energy efficiency in the economy is an
important policy goal in both Sweden and the EU. Policymakers can
address inefficiencies caused by incomplete information and knowledge
by designing policies that take advantage of smart meters and other
equipment to inform electricity consumers about their own and other’s
10
Energy Policy 149 (2021) 112095
electricity use. To design effective policies, information about the pre­
sumptive knowledge gap and how to close it is needed.
In this paper, we test the commonly assumed notion that the lack of
relevant energy-related knowledge, which we also document among our
survey respondents, are likely to result in underestimated cost of using
energy intensive appliances. This is a policy relevant question as most
Swedish households lack direct feedback in the form of marginal costs of
using specific electrical appliances that potentially leads to inefficiently
much use of energy. As a result, policy makers and other stakeholders
are increasingly interested in providing electricity consumers with
relevant information to enhance their knowledge hoping it will help to
lower electricity consumption.
Our results show a wide range of cost perceptions and that many
people use home appliances under imperfect knowledge about their
costs. We also find that people, on average, have relatively high cost
perceptions compared with (realistic) benchmark values. Contrary to
our expectations, we find that persons that are more knowledgeable tend
to have lower cost perceptions. Thus, if less “energy literate” persons are
provided with information aiming to update their cost perceptions, and
if their usage of home appliances is sensitive to the costs of running
them, residential energy use will increase. From a policy perspective,
this is unwanted if the intention of information policies is to reduce
energy use. We argue, based on our findings, that the generally positive
relationship between knowledge/information provision and energy
savings, which has been found in previous studies (see e.g. (Blasch et al.
(2017)); Trotta et al., 2017), is more likely driven by pro-social and
pro-environmental motives than by financial motives.
We also find a negative correlation between less knowledgeable
respondent types and their willingness to receive cost-free knowledge
enhancing information. This result suggests that some people want to
stay less knowledgeable about their everyday energy consumption.
From a policy perspective, it is somewhat worrying that some less
knowledgeable types tend to be less eager to receive energy-related in­
formation. This further indicates that information campaigns targeting
supposedly lack of knowledge among energy users might not be as
welfare enhancing as previous policy evaluations have suggested. Due to
limitations of our data, we cannot estimate the welfare impact of
informational programs taking into account all relevant social benefits
and costs.
If governments want to reduce the residential energy use, our results
point in the direction of continuing the work with policies that affect the
purchase decisions and the energy performance of new appliances rather
than implementing informational policies. However, if information
programs are implemented that continuously provides feedback to
households on their own and other households’ energy use, it may be
important in a welfare perspective to make it possible for households to
easily opt-out from the program. The opt-out possibility minimizes the
negative impact that information may have on households receiving
information that for some reason is unwanted.
There are obvious limitations with our survey approach and the re­
sults therefore must be interpreted carefully. Still, we are confident to
conclude that a lack of knowledge does not automatically translates into
underestimations of costs and demand for more information. In fact,
many households do not want more information, especially information
in the form of peer comparisons.
CRediT authorship contribution statement
Thomas Broberg: Conceptualization, Data curation, Formal anal­
ysis, Funding acquisition, Investigation, Methodology, Project admin­
istration, Visualization, Writing - original draft, Writing - review &
editing. Andrius Kažukauskas: Conceptualization, Data curation,
Formal analysis, Funding acquisition, Investigation, Methodology,
Project administration, Visualization, Writing - original draft, Writing -
review & editing.
T. Broberg and A. Kažukauskas Energy Policy 149 (2021) 112095

Declaration of competing interest Acknowledgement

The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
This paper is part of a research project funded by the Swedish Energy
Agency (project No. 39937–1) and the European Regional Development
Fund (project No. 01.2.2-LMT-K-718-02-0007) under grant agreement
with the Research Council of Lithuania (LMTLT). Comments from three
anonymous referees are gratefully acknowledged.

Appendix A

Indicator No. 1: To get an idea of people’s awareness of electricity prices, we asked people about the perceived price of using one kWh electricity.
The respondents were asked to state intervals. About half of the respondents declined to provide their perceptions by stating that they have no idea (in
Swedish “ingen uppfattning”) about the cost of electricity. Among the respondents stating an interval, a majority were quite close to a reasonable price
of using one kWh of electricity. The question was (translated to English):
Spontaneously, how much would you say it cost your household to consume 1 kilowatt hour in your home? If you do not pay for electricity, base your estimate
on how much you think it cost your landlord. We want you to answer without looking for a right answer on the web or elsewhere.
Somewhere in between SEK _ _, _ _ and SEK_ _, _ _
Indicator No. 2: To get an idea of people’s knowledge of their household’s annual energy use in kWh, we asked how much electricity they used in
2013 and gave them eight options to choose between:
How many kWh electricity did your household consume during 2013?

• 0–3000 (1)
• 3000–6000 (2)
• 6000–10 000 (3)
• 10 000–14 000 (4)
• 14 000–20 000 (5)
• 20 000–26 000 (6)
• 26 001- (7)
• Do not know (8)

We classified respondents who chose the last option (No. 8, “I do not know”) as inattentive to the quantities of electricity they use.
Indicator No. 3: For this, we asked what type of contract they currently have (variable rate, fixed rate or default rate):
What type of price agreement do you currently have with your electricity provider (regarding flexibility)?

• Variable price (per hour or month) (1)

• Fixed price (1–5 years) (2)
• The default contract that applied to us when we moved in to our current home (“ tillsvidareavtal”/“anvisningsavtal”) (3)
• Electricity is included in the apartment rent/fee (our household do not have a contract with a electricity provider) (4)
• Other (5)____________
• Do not know (6)

We classified the respondents who chose the last option (No. 6, “I do not know”) as inattentive to their electricity contract.
Questions about perceived cost ranges.
We want you to provide us with the cost estimates of using energy services. Please answer below specified questions spontaneously without looking
for the right answer (e.g. by looking at invoices, internet etc.). Please start from your own circumstances. How large is the energy cost to …

a. run the standard program (about 2 h) of a dishwasher for home use?

Somewhere in between SEK __, __ and SEK__, __
b. preheat an ordinary oven to 200◦ and then use it for an hour?
Somewhere in between SEK __, __ and SEK__, __
c. shower for 5 min with a water temperature of 37◦ using a regular shower head (i.e. not a “water-saving” or “rain” shower head)?
Somewhere in between SEK __, __ and SEK__, __

Appendix B

Table 1
Scoring coefficients for the index No2 for lack of knowledge about energy issues.

Variable Factor_inattention

Indicator_1 (lack of knowledge about price of electricity) 0.298

Indicator _2 (lack of knowledge about electricity use) 0.461
Indicator _3 (lack of knowledge about the nature of their electricity contract) 0.252

11
T. Broberg and A. Kažukauskas Energy Policy 149 (2021) 112095

Table 2
Polychoric correlation matrix of the selected variables.

Comp Past Micro Av_dish Av_oven Av_shower Index_1 Index_2 Higher_edu Age Woman Hh_size Dir_el_heat Income_hh

Comparison 1.00
Past Consumption 0.71 1.00
Appliance use 0.70 0.61 1.00
Average_dish 0.03 − 0.04 0.05 1.00
Average_oven − 0.01 − 0.03 0.04 0.78 1.00
Average_shower − 0.01 − 0.01 0.05 0.73 0.77 1.00
Index_1 − 0.09 − 0.33 − 0.08 0.28 0.23 0.21 1.00
Index_2 − 0.08 − 0.32 − 0.06 0.27 0.22 0.21 1.00 1.00
Higher_edu 0.09 0.13 0.06 − 0.03 − 0.01 − 0.05 − 0.04 − 0.02 1.00
Age − 0.14 − 0.04 − 0.17 − 0.19 − 0.17 − 0.23 − 0.31 − 0.32 0.01 1.00
Woman 0.01 − 0.19 0.16 0.14 0.09 0.12 0.31 0.31 − 0.05 0.00 1.00
Hh_size 0.05 0.05 0.05 0.12 0.10 0.19 − 0.05 − 0.05 − 0.06 − 0.29 − 0.13 1.00
Direct_el_heat 0.13 0.14 0.05 0.00 0.08 0.03 − 0.23 − 0.24 0.01 0.18 − 0.06 0.15 1.00
Income_hh 0.05 0.09 0.03 0.01 0.00 0.04 − 0.09 − 0.08 0.21 − 0.08 − 0.24 0.54 0.11 1.00

Table 3
Factor extracted and variance explained.

Factor Eigenvalue differences Proportion Cumulative

Factor1 1.79444 1.87183 1.1614 1.1614

Factor2 − 0.07739 0.09465 − 0.0501 1.1113
Factor3 − 0.17204 . − 0.1113 1
LR test: independent vs. saturated: chi2(3) = 1158.06 Prob > chi2 = 0.0000.

Appendix C. The effects of each energy-related knowledge indicator (Indicator_1 - Indicator_3) on respondents’ perception of (1) the cost
of running a common dishwasher for 2 h, (2) the cost of using ordinary oven for 1 h, and (3) the costs of taking a hot shower for 5 min

Variable/Model dishwasher Oven shower dishwasher oven shower dishwasher oven shower

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Indicator_1 5.1917*** 3.6611*** 2.4513*** – – – – – –

(0.8289) (0.8390) (0.7877) – – – – – –
Indicator_2 – – – 3.0237*** 3.1423*** 1.5911* – – –
– – – (1.0547) (0.9784) (0.9312) – – –
Indicator_3 – – – – – – 1.3172 0.9087 1.2601
– – – – – – (1.5134) (1.5904) (1.5573)
Age − 0.0555** − 0.0626** − 0.1014*** − 0.0582** − 0.0546** − 0.1011*** − 0.0812*** − 0.0812*** − 0.1117***
(0.0236) (0.0248) (0.0271) (0.0260) (0.0256) (0.0283) (0.0239) (0.0248) (0.0277)
Womana 1.5794* 0.5120 1.4758* 2.3233*** 0.8660 1.7997** 2.8268*** 1.3695* 2.0380***
(0.8945) (0.8626) (0.8554) (0.8931) (0.8016) (0.8177) (0.8711) (0.8000) (0.7781)
Household size 1.1812** 0.8843* 1.4781*** 1.1830** 0.9319* 1.4872*** 1.0240** 0.7634 1.3995***
(0.4768) (0.5044) (0.4879) (0.4810) (0.5134) (0.4845) (0.4792) (0.5084) (0.4861)
Dir_el_heata 0.1049 1.2992 0.1632 0.2971 1.5628 0.2570 − 0.1110 1.1361 0.0723
(0.9567) (1.0915) (0.8172) (0.9647) (1.0934) (0.8406) (0.9863) (1.1076) (0.8319)
Constant 4.6649*** 6.7384*** 6.4719*** 6.1371*** 6.8345*** 7.0205*** 8.5421*** 9.5354*** 8.1620***
(1.8105) (2.0782) (2.0955) (2.0433) (2.2656) (2.2107) (1.9240) (2.2347) (2.2243)
Observations 837 854 856 837 854 856 837 854 856
Note: robust standard errors in parentheses; ***p < 0.01, **p < 0.05, *p < 0.1.
a
indicates dummy variable.

Appendix D. The robustness tests for the positive significant relationship between our index for knowledge and cost perceptions

Robustness checks Index 1 Index 2

Dishwasher Oven Shower Dishwasher Oven Shower

Interval regression with log-logistic type of distributional assumption Positive Positive Positive Positive Positive Positive
*** *** *** *** *** ***
Interval regression with log-normal type of distributional assumption Positive Positive Positive Positive Positive Positive
*** *** *** *** *** ***
Interval regression with gamma type of distributional assumption Positive Positive Positive Positive Positive Positive
*** *** *** *** *** ***
Truncated regression at 0 lower bound Positive Positive Positive Positive Positive Positive
*** *** * *** *** *
Interval regression with income and education included in specification Positive Positive Positive Positive Positive Positive
*** *** *** *** *** ***
OLS using lower bound instead of interval regression Positive Positive Positive Positive Positive Positive
*** *** ** *** *** **
Restricted sample to a single person household Positive Positive Positive Positive Positive Positive
(continued on next page)

12
T. Broberg and A. Kažukauskas Energy Policy 149 (2021) 112095

(continued )
Robustness checks Index 1 Index 2

Dishwasher Oven Shower Dishwasher Oven Shower

*** *** ** *** *** **

Dropping 54 households that rent their homes and do not pay electricity bills Positive Positive Positive Positive Positive Positive
*** *** ** *** *** **
Note: robust standard errors; ***p < 0.01, **p < 0.05, *p < 0.1.

Appendix E. Marginal effects of energy-related knowledge indicators (Indicator_1 – Indicator_3) explaining willingness to receive certain
information (9 probit models)

Variable/Model willing to receive information on

comparison past appliance comparison past appliance comparison past appliance

consumption use consumption use consumption use

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Indicator_1 − 0.0714** − 0.2043*** − 0.0925*** – – – – – –

(0.0363) (0.0326) (0.0353) – – – – – –
Indicator_2 – – – − 0.0609 − 0.1781*** − 0.0992** – – –
– – – (0.0389) (0.0379) (0.0390) – – –
Indicator_3 – – – – – – − 0.2230*** − 0.2482*** − 0.2227***
– – – – – – (0.0520) (0.0619) (0.0609)
Age − 0.0038*** − 0.0015 − 0.0036*** − 0.0040*** − 0.0020* − 0.0041*** − 0.0042*** − 0.0011 − 0.0038***
(0.0011) (0.0010) (0.0011) (0.0012) (0.0011) (0.0012) (0.0011) (0.0010) (0.0011)
Womana 0.0247 − 0.0614* 0.0991*** 0.0187 − 0.0759** 0.0951*** 0.0133 − 0.1022*** 0.0822**
(0.0360) (0.0342) (0.0351) (0.0358) (0.0340) (0.0349) (0.0352) (0.0333) (0.0344)
Household size 0.0032 − 0.0034 0.0061 0.0003 − 0.0109 0.0013 0.0063 0.0022 0.0091
(0.0185) (0.0179) (0.0188) (0.0187) (0.0180) (0.0190) (0.0187) (0.0182) (0.0190)
Dir_el_heata 0.1108** 0.0883** 0.0703 0.1063** 0.0732 0.0629 0.1081** 0.0891** 0.0696
(0.0495) (0.0433) (0.0468) (0.0500) (0.0445) (0.0474) (0.0496) (0.0434) (0.0471)
Income_hh 0.0011 0.0049 0.0019 0.0019 0.0072 0.0030 0.0012 0.0062 0.0022
(0.0054) (0.0052) (0.0054) (0.0054) (0.0052) (0.0054) (0.0055) (0.0052) (0.0055)
Higher_educationa 0.0764** 0.0650* 0.0349 0.0803** 0.0770** 0.0402 0.0808** 0.0763** 0.0404
(0.0378) (0.0347) (0.0370) (0.0378) (0.0342) (0.0371) (0.0380) (0.0343) (0.0370)
Observations 847 847 847 847 847 847 847 847 847
Note: robust standard errors in parentheses; ***p < 0.01, **p < 0.05, *p < 0.1.
a indicates dummy variable.

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