Behavioral Biases in Household Energy Spending

Little work exists on behavioral biases as barriers to energy efficiency in developing settings. This project partners with a major producer of energy efficient charcoal stoves in Kenya to evaluate the effects of credit constraints, limited attention, concentration bias, and present bias on the perceptions of energy savings and subsequent technology adoption and usage. First, potential purchasers are prompted to exercise greater attention by calculating expected savings from the stove. Then, cross-randomization is used to study the relationship between this inattention problem and traditional credit constraints. The authors test for concentration bias by varying the amount sizes in these attention and credit constraints treatments. Finally, they use high-frequency surveys to estimate the effect of stove ownership on household energy expenditures. A working paper can be found here.