September 17, 2018, 11:00–12:15
Room MS 003
Environment Economics Seminar
Energy efficiency labels are intended to better inform consumers at the point of sale about unobservable product characteristics. The EU Energy Label is globally one of the largest labeling schemes and obligates manufacturers of white goods to self-certify the efficiency class into which the energy efficiency index (EEI) of their product falls. The integrity of the scheme is reliant on manufacturers' compliance with the certification protocol and accurate declaration of the certification results. I construct a database that contains the product characteristics of 212 refrigeration devices sold on EU markets before and after the introduction of the label and compare self-reported and third-party verified EEIs. I find that under the label (1) there is evidence for bunching in self-certified EEIs, but not in verified EEIs, pointing to misreporting; (2) self-certified EEIs understate equivalent energy consumption by roughly 20 percent; (3) understatement clusters at class boundaries; and (4) the patterns of misreporting are consistent with economic calculus. Before the introduction of the label, there is no evidence for bunching and significantly less underreporting of energy efficiency performance. In its current implementation, the EU Energy Label therefore plausibly induces misreporting, partly negating the intended information gains and impacting negatively on information-attentive consumers.