Academic journal article
By Mayer, Peter C.
Contemporary Economic Policy , Vol. 14, No. 1
Families that install their own household equipment may be less inclined to purchase energy-saving equipment than are families that pay for installation. This empirical finding is predictable through sensible and transparent reasoning. The discovery has implications for promoting energy efficiency and may explain previous empirical findings.
Buyer installation of energy saving equipment raises the perceived and, at times, the actual cost of the equipment relative to the cost of standard equipment. Particularly if the energy-saving equipment has an unfamiliar name, buyer installation may appear to require that the buyer acquire new skills and tools. In the case of the heat-pump water heater used in the survey, the requirement is genuine.
Survey subjects come from three sources: 54 from employees entering their shift at the Guam Mass Transit Authority, nine from a management class of the University of Maryland overseas program, and three from Guam Customs officers entering their shift.
The appendix presents the survey questionnaire. Question 3 contains the survey objective, which was to test the impact of the alternate presentations of the heat-pump water heater cost on the purchase of a heat-pump versus a standard water heater. This impact proved insignificant. The purpose of Questions 1 and 2 was to present a scenario and not to generate an empirical information. Nevertheless, the response to Question 1, "Would you or a member of your family install the new water heater or would you pay for installation?" proved behaviorally and statistically significant. The demographic variables requested at the beginning were statistically insignificant.
III. EMPIRICAL FINDING
Equation (1) represents results of a logit regression. Standard deviations are in parentheses. The dependent variable, ln(ODDS), is the natural logarithm of the odds of a person choosing a heat-pump water heater (Question 3). The independent variable, INSTALL, equals 1 for the subject response of "You or family member install" and equals 0 for the response of "Pay for installation" (Question 1).
(1) ln (ODDS) = 0.9163 - 1.8654 (INSTALL). (2.92) (.595)
Sample size = 64
The impact of buyer installation on the odds of purchasing a heat-pump heater is statistically significant at more than a 2 percent level. Odds of choosing a heat-pump heater falls from 2.50 to 0.39 when the family installs rather than hiring a professional installer. Since it is unclear as to what population the survey sample represents, the numerical figure for the change in the odds has less meaning than the statistical significance of the impact.
IV. POLICY CONCLUSIONS
That buyer installation lowers the inclination to purchase a heat-pump water heater reveals a special problem in promoting energy efficient equipment with an unfamiliar name. The unfamiliar name suggests to the do-it-yourself installer that he or she may need additional skills and perhaps additional tools in order to complete the job.
When installation of energy-saving equipment with an unfamiliar name is essentially the same as that of standard equipment, the promotional material should so state. …