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Energy Policy and Consumer Reality

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Energy Policy and Consumer Reality ENERGY POLICY AND CONSUMER REALITY: THE ROLE OF ENERGY IN THE PURCHASE OF HOUSEHOLD APPLIANCES IN THE U.S. AND THAILAND by Peter T. du Pont A dissertation submitted to the Faculty of the University of Delaware in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Urban Affairs and Public Policy April 1998 ABSTRACT The proliferation of household appliances is a global energy problem, and this comparative study of appliance energy labeling in the U.S. and Thailand offers opportunities to learn from the implementation of programs in countries with different income levels and cultural and political climates. In the U.S., I conducted participant observation in an appliance store and interviewed 16 policymakers, 14 salespeople, and 100 consumers. In Thailand, I interviewed 11 policymakers, 53 salespeople, and 62 consumers, and carried out a national survey of 971 consumers. This study is the first time that energy labels have been examined primarily as a problem of consumer cognition in context — that is, how consumers read, interpret, and think about energy labels in the retail environment. After just three years of implementation, the Thai appliance labeling program is having a significantly greater impact on the consumer appliance market than is the 20-year-old U.S. program. While Thai salespeople report that more than 60% of consumers ask about or look at the label, the corresponding number for the U.S. is just 20%. Energy efficiency was reported among the top-three purchase priorities by 28% of Thai appliance consumers, compared to just 11% of U.S. consumers. In my in-store tests of label cognition, the U.S. EnergyGuide label fared poorly, and the Thai appliance label was more effective at helping consumers to identify efficient models. Yet both labels suffer from the problem of too much detailed product information, which hinders label comprehension. Salespeople are the missing link in both appliance labeling programs. While they exert a significant influence in at least half of appliance sales, their incentives typically motivate them to sell appliances that have additional features and use more energy. Finally, U.S. and Thai policymakers have defined different purposes for their appliance labeling programs. The objective of the U.S. program is to provide consumers with information to assist in their appliance purchase decisions. In contrast, the objective of the Thai program is more clearly behavioral — to persuade consumers to buy a more efficient appliance that will save money and protect the environment. To support the program, the Thai government has implemented a massive, nationwide advertising campaign. ii ACKNOWLEDGMENTS I would like first and foremost to express my warm appreciation to my advisor and mentor, Dr. Willett Kempton, who inspired this research project and whose patience, enthusiasm, and insights into how to link the academic with the real world continue to inspire me. I would also like to thank my committee members, Dr. Robert Denhardt, Dr. Alan Meier, Dr. Loren Lutzenhiser, and Prof. Paktrawimol Phienlumplert for their incisive questioning of my analysis. Thanks also to Deirdre Lord, who energetically helped me start this massive research project, and to my other colleagues at the University of Delaware, including Chris Payne, Maithili Iyer, Kofi Berko, Lawrence Agbemabiese, Christine Egan, and Anita Eide. My foray into the arena of U.S. appliances would not have been possible without the advice and assistance of Marty Rogoff and Dan Barzel. Special kudos are due to Mike Garrison for lending me his polyester tie as well as to his crew of salesmen who tolerated my tape recorder and inquisitive nature for two weeks: Leo, Tom, Charles, Carlo, Jerry, and Rocco. I would also like to thank James Mills at the Federal Trade Commission for his support, candid opinions, and openness to my suggestions; Jeff Harris for hosting a forum for me at Lawrence Berkeley National Laboratory; John Jimbaldo of AHAM for providing critical data on the U.S. appliance industry; and Jim McMahon and Ike Turiel of Lawrence Berkeley National Laboratory and Diane Pirkey of the U.S. Department of Energy for sharing their thoughts on appliances and labeling policy. In Thailand, I am deeply indebted to Drs. Piyasvasti Amranand and Pongpisit Viseshakul of the National Energy Policy Office, who agreed to fund my interview and survey work in that country. Khun Sitthiporn Ratanopas, director of the DSM Office at the Electricity Generating Authority of Thailand generously shared his time and viewpoints with me, during my annual return visits to Thailand. I would also like to express my appreciation to Dr. Thienchai Chongpeerapien, who provided valuable advice in how to organize the survey effort. Through his dedication and persistence, Prof. Tagud Sreecomporn helped our research team to exceed its goals and collect more data than I could ever imagine wanting to analyze. And thanks to the tireless survey researchers, Dai, Bed, and Earth, who were so efficient in their efforts that I had to place caps on their daily production. Globally, Paul Waide, Lloyd Harrington, and Anne Wilkins were extremely helpful and forthcoming with information about appliance energy labeling policy in the European Union, Australia, and Canada, respectively. George Wilkenfeld of Australia and Kristina Egan of the International Institute for Energy Conservation shared their insights on the relationship between standards and labeling policies. Thanks to Nick Banks of the Environmental Change Unit at Oxford University, who is pursuing similar work with British consumers, for iii sharing references and ideas. I would also like express a special heartfelt thanks to my colleagues at the International Institute for Energy Conservation, especially Russell Sturm, Terry Kraft-Oliver, and the entire IIEC-Asia office, for having the patience to wait for me while I was immersed in the world of academia. And finally, I would like to thank my family and, most of important of all, my wife, Dhon, without whom I would never have completed this dissertation and through whose eyes I have gained such a deeper understanding of Thailand. She makes every day on this earth a sheer joy. DEDICATION This dissertation is dedicated to my step-father, Thomas M. Green III, whom I miss terribly, and who taught me where to look for the white dragon. iv TABLE OF CONTENTS ABSTRACT........................................................................................................................ii ACKNOWLEDGMENTS ................................................................................................. iii LIST OF TABLES ............................................................................................................. xi LIST OF FIGURES.......................................................................................................... xiv CHAPTER 1. APPLIANCES: CONVENIENCE AT A COST ..................................... 1-1 Introduction.............................................................................................................. 1-1 Evolution of the U.S. Home Appliance Industry..................................................... 1-2 The “Waves” of Appliance Uptake...................................................................... 1-3 Technology, Progress, and the Consumer Society................................................... 1-4 Implications of Consumerism for Developing Countries .................................... 1-6 Thailand: Appliance Uptake in an Industrializing Economy............................... 1-7 Scope of the Dissertation ......................................................................................... 1-8 Organization of the Dissertation ........................................................................ 1-11 CHAPTER 2. RESEARCH ON CONSUMER BEHAVIOR AND ENERGY LABELING............................................................................. 2-1 Introduction.............................................................................................................. 2-1 Prior Research on Consumer Energy Behavior........................................................ 2-1 Economic and Behavioral Frameworks ............................................................... 2-2 Attitudes Toward Energy and the Environment................................................... 2-4 Energy as a Consumer Priority?........................................................................... 2-4 Consumer Search Patterns ................................................................................... 2-6 The Role of the Salesperson ................................................................................ 2-7 Consumer Response to Energy Labels..................................................................... 2-9 A Typology of Labels .......................................................................................... 2-9 Labels from Around the World.......................................................................... 2-10 v The Pressing Need for Field Research............................................................... 2-11 A Framework for Studying Label Impacts......................................................... 2-11 Review of Past Label Evaluations ......................................................................... 2-12 Understanding the Label .................................................................................... 2-12 Scales and Metrics ............................................................................................
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