Rebound effects of behavioural efficiency improvements in households' energy services consumption in the presence of demand rigidities and habits

Changes in energy consumption behaviour of households are recognised as a main contributor to reduced energy demand in developed countries. We investigate the economy-wide impacts of a more efficient electricity consumption behaviour in the presence of demand rigidities and consumption habits. Our findings demonstrate that in the context of energy efficiency improvements in households, taking into account rebound effects is vital, as rebound effects can drastically reduce expected energy savings. We further point out that policies aimed at reducing household energy consumption should always take demand rigidities and consumption habits into account, otherwise rebound effects could be significantly underestimated.