۱- Introduction

۲- Materials and methods

۳- Results

۴- Discussion

۵- Conclusions

References

Abstract

Improving rural household energy efficiency is an important policy issue for climate change mitigation in China. A better understanding of the factors affecting farmers’ energy-efficient appliance use behavior can help policymakers design more effective policies. This paper explores the effect of farmers’ risk preferences and loss aversion on their energy-efficient appliance use behavior in rural China. Using unique data from a survey and a paired lottery experiment completed by 235 rural household heads in the Dazu District of China, this study finds that the farmers’ risk preferences and loss aversion have significant effects on their energy-efficient appliance use behavior. The more risk-averse farmers are less likely to buy or use energy-efficient appliances. The farmers who are more loss averse are more willing to purchase and more likely to use durable energy-efficient appliances. In addition, the farmers’ demographic factors (age, gender, education, and family location), their perceptions of climate change adaptation and their trust attitudes have significant effects on their energy-efficient appliance use behavior. This paper contributes to the emerging literature that relates risk preferences and loss aversion in experiments to farmers’ energy-efficient appliance use behavior.

Introduction

Total energy consumption has increased rapidly in the past decades all over the world. Fossil fuels play an important role in the world’s energy consumption. However, with fast depletion and many issues surrounding the use of fossil fuels (Dhinesh et al., 2016; Parthasarathy et al., 2016), improving energy efficiency is considered an important option for meeting energy and climate targets in many countries (Matsumoto and Omata, 2017; Craig, 2018). In China, almost one half of the population lives in rural areas (Liu et al., 2013). Therefore, improving the energy efficiency of rural households is considered an important strategy for climate change mitigation in China (Fei and Lin, 2017). There are a number of factors affecting residents’ energy use behavior, such as household composition and income, education and information, and regulations and policies (Wang and Jiang, 2017). In recent years, studies have aimed to incorporate insights from economics, psychology and sociology to overcome the oftcriticized disciplinary lock-in of energy studies (Volland, 2017). Some scholars argue that investments in energy-efficient consumption behavior generate uncertain benefits and can be considered risky (Qiu et al., 2014). Therefore, risk preferences are expected to affect energy efficiency adoption (Just and Zilberman, 1983; Liu and Huang, 2013). Farsi (2010) conducted a choice experiment study in Switzerland and found that risk attitudes were important determinants for consumers to choose energy-efficient home improvements. Fischbacher et al. (2015) suggested that more risk-averse households were less likely to adopt energyefficient ventilation and insulation systems in Switzerland. In a sample of homeowners from California and Arizona in the US, Qiu et al. (2014) found that individuals who were more risk averse were less likely to have adopted various energy-efficient measures and appliances (but not air conditioners). However, in the context of developing countries, very few empirical studies have considered the influence of risk preferences on energy use behavior. The common model to characterize an individual’s risk preference in the literature is the expected utility theory, where risk aversion is the sole parameter for determining the curvature of the utility function (Holt and Laury, 2002).