Consumer Response to Energy Label Policies : Evidence from the Brazilian Energy Label Program

We examine the effects of the PBE program, which made the adoption of energy labels mandatory in the Brazilian refrigerator market. Using data from a nationally representative sample of households, we estimate a structural model of appliance choice. We document a modest increase in the valuation of energy costs and reject the equality of pre- and post-PBE valuation distributions as well as the null of their correct valuation, a finding consistent with the existence of an energy efficiency gap. Our policy simulation documents little product switching and substantial heterogeneity in responses. In particular, households aware of the energy label attain improved energy consumption and energy efficiency, the twin targets of PBE. Cognition and attentiveness enhance the effect of the program among informed households, whereas high-income, uninformed, households switch to refrigerators which are more efficient yet more energy-consuming. Increasing information about the label as well as its design are among the ways one can improve theoutcomes of the program