Does an energy efficiency label alter consumers' purchasing decisions? A latent class approach based on a stated choice experiment in Shanghai

In this paper we conducted a hypothetical choice experiment in Shanghai, China, to examine whether the China Energy Efficiency Label influences consumers' choices of air conditioners and refrigerators. A latent class approach was applied to observe both heterogeneities among the respondents and product brands. Our results suggested that consumers in Shanghai were well aware of the China Energy Efficiency Label and tended to pay more attention to products with such labels. In addition, air conditioners and refrigerators affixed with a hypothetical label that indicates saving in electricity bills compared with a standard model received significant preferences, which suggested that the more information manufacturers provide, the more their products would be preferred by consumers. Finally, weighted by class probability, the willingness to pay values for more energy efficient refrigerators were higher than those for more energy efficient air conditioners, implying that Shanghai consumers have greater incentive to pay more for appliances they use more frequently.