Consumer preference for labels in the purchase decisions of air conditioners in India

Appliance labels provide consumers with information on energy usage of appliances and mandatory labeling is an important policy tool for promoting the adoption of efficient appliances. Following global practice, standards and labeling programs have been adopted in India for various appliances since 2006. This paper provides empirical support for this approach, by estimating the value placed by consumers in India on energy labels. The estimates of willingness to pay (WTP) for energy labels and higher efficiency as indicated on labels are obtained using a discrete choice experiment in purchase decisions of air conditioners. A mixed logit model is specified to estimate the parameters for chosen attributes of air conditioners. The results show that consumers place a positive value on the presence of labels. The preference for star rating levels is heterogeneous in the sample. The WTP for higher star rating is estimated which is a useful input in designing other energy efficiency programs in conjunction with the labeling program.