Energy efficiency and heating technology investments : manipulating financial information in a discrete choice experiment

We elicit homeowners' marginal willingness to pay (MWTP) for energy efficiency and low-carbon technologies in the context of replacement heating appliances. We exploit a novel within-between subject design that involves manipulating information in a two-stage discrete choice experiment (DCE) and using WTP space estimation to identify the role of financial information in reducing fossil fuel use. We find that homeowners' average valuation of energy efficiency exceeds associated heating cost savings, suggesting that they also consider non-monetary benefits when evaluating this type of investment. By contrast, we identify large heterogeneity in preferences for different heating technologies (i.e., oil, gas, wood, heat pump), and that on average, oil users' MWTP for switching to low-carbon technologies does not cover respective investment cost differentials. Finally, our difference-in-difference results show that the provision of information about private and pro-social benefits of investments fails to increase MWTP for energy efficient and low-carbon technologies.