(University of Milan)
Abstract: In this paper we combine administrative data from an Italian online retailer with daily weather data to examine how temperature and other weather shocks affect users’ decision to purchase Air Conditioners (ACs) and other energy-using durables. Based on existing evidence on projection bias in consumer behaviour, we expect high outside temperature on a day to be associated with higher purchases of ACs on that day, but not of other types of appliances. Similarly, humidity and wind speed on a day should affect the purchases of driers, but not of other types of appliances. The empirical results confirm these predictions. In addition, we find that weather-induced purchases of ACs are in lower-efficiency energy classes. We examine how models of memory and attention can explain these behavioural patterns. Understanding these dynamics is important for the design of energy efficiency policies, given the large and long-lasting consequences on energy consumption of infrequent purchase decisions of energy durables.
The seminar will be in person: DEMS Seminar room 2104, Building U7