Choice architecture & fuel efficiency

Elke Weber, Eric Johnson, Rick Larrick, Christoph Ungemach, Adrian Camilleri

This project examines the effects of the Environmental Protection Agency’s (EPA) fuel economy vehicle labels as well as similar labels introduced by other agencies to communicate important consumer information. In May 2011, the EPA and National Highway Traffic Safety Administration (NHTSA) announced new window stickers for automobiles sold in 2013 and after. The new stickers now include the gas consumption in gallons per 100 miles, an effort to address the so called Miles Per Gallon (MPG) Illusion (Larrick & Soll, 2008), and a number of other attributes derived from the consumption metrics that highlight cost and environmental impact of the cars.

The goal of this project is to investigate whether and why an individual’s preference for an energy efficient product is influenced by the presentation of additional “translated attributes”. A translated attribute is a metric that can be derived by a simple transformation of an already known metric. For example, miles per gallon can be translated into CO² emissions or an annual fuel cost. In total, we conducted 6 online experiments testing the effect of presenting different sets of translated attributes.  A manuscript has been prepared which is currently under review.

Major Findings

• Presenting multiple translated attributes can affect consumer choice in predictable ways by two separate mechanisms that can be utilized as choice architecture tools.
• First, consumers often choose the option that is preferred on most of the available attributes. Participants presented with additional fuel efficiency metrics were more likely to select the efficient product whereas people presented with additional translated price metrics were more likely to select the cheaper product.
• Second, translated attributes can activate different goals and facilitate choice according to personal preferences (signpost function). The effect of consumers’ personal goals on choice is strongest for those who have goals matching those activated by the translated attributes (Goal Activation).  When presented with greenhouse gas information consumers who care about the environment are reminded about their goals and enabled to act accordingly.

Broader impacts

• The findings of our research inform policy-makers, marketers, and consumers about how translating a product’s characteristics into different attributes can change people’s choices.
• Our results have specific policy implications for the design of future EPA fuel economy vehicle labels and government-mandated consumer labels more generally. The consideration of the label design implication in regulatory policies could facilitate informed consumer choice.

CRED2 Award (2010-2015): Funding was provided under the cooperative agreement NSF SES-0951516 awarded to the Center for Research on Environmental Decisions.