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Use Case 4: Examine the relation of energy consumption behavioural biases with consumers’ financial literacy level.

The flow of Serious Game
The flow of Use Case 4

Rationale: Investing in energy-efficient products like electrical appliances and small electronic products implicitly assumes that consumers must pay in advance a higher proportion of money than otherwise and then gain in terms of money in the long run. For energy-efficient products to have a high penetration rate, consumers need to be financial literate thus to be able to anticipate what the time value of money is, what are inflation and interest rates. Financial literacy is the ability to use knowledge and skills to effectively manage financial resources at a personal level. It is more than numeracy— “being good with numbers”. It includes for example the understanding of how compound interest rates operate, the difference between real and nominal values and the role played by inflation, and principles of financial risk diversification, inter alia. The enhancement of financial literacy is becoming a major worldwide policy target, with governments and almost every major financial institution around the world being interested in engaging in this agenda. This modern policy and skills agenda have emerged from a series of academic studies, which showed that financial literacy matters for several desirable economic and societal outcomes. This linkage would induce different design in intervention policies for enhancing energy efficiency in order to take into financial literacy level.

Research questions: This study seeks to determine the impact of energy related financial literacy, demographic factors, and behavioural intention/attitude on decisions to repair or replace Household appliances across resident types. Specifically, the following questions are asked:
1. What impact do financial literacy, energy literacy, environmental concern or resident type have on the decision to repair or replace?
2. What impact has the salience of financial information on the decision to repair or replace?
3. What type of information impacts willingness to pay for a repair or replacement of an appliance? Specifically, what impact has financial, anticipated lifecycle or environmental framing on willingness to pay for a repair.
4. Does providing tips and information related to financial literacy enhance consumers ability to make better choices?

Design and impact: We expect that low levels of financial literacy may deter consumers from buying more energy-efficient products. A serious game will be designed based on the behavioural biases that are identified in the literature as being most troublesome for energy consumption. A focus group will be convened with a purposeful sample – taking people from various socio-economic groups (especially homeowners, renters, students, elderly). The focus group will explore the understanding of the participants of the financial aspects and how it influences their behaviour. We expect to have more than 1000 participants for being able to extract robust results and policy measures. The assessment of the levels of financial literacy in population samples in the academic literature was based on the specification of quiz-type questions, installed in custom-made – and later on mainstream – population surveys. The former approach is based on long test-type quizzes.

Key Performance Indicators (KPIs):  To examine the impact of a number of specific factors on the decision to repair or replace appliances a survey will be developed. This survey will be provided to all participants prior to the serious game and will provide insight into baseline levels of financial and energy literacy, amongst other measures. We seek to provide a synthesis of available measures related to financial literacy, environmental literacy and energy consumption. The specific measures to be included within the survey will be determined based upon this analysis and may vary from those presented below.

1. Socio-demographic Information.

2. Residence Characteristics.

3. Energy Related Financial Literacy.

4: Behavioural Intention/Attitude.

5. Environmental Literacy.

Involved Energy Actors:   PPC and CWATT

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This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 957117. The information contained in this website reflects only the authors’ view. EC is not responsible for any use that may be made of this information.