Consumers' Understanding of Energy Labels: Perception of Eco‐Design With Scale Range and Color‐Coding

ABSTRACT Energy labels help consumers understand the environmental impact of products. This drives consumer behavior. Knowing how label features are perceived can thus have important implications for design, policy, and management. Energy labels contain different design features that convey information about the range of available energy classes. Such contextual information can help people make informed comparisons. Across three behavioral experiments, we evaluate the perception of (EU's eco‐design) energy labels based on their letter scale, color‐coding, and information about the scale's range of energy classes. These three features had different influences on judgments of environmental friendliness. A letter scale that begins with the alphabet (A to G) helped participants tell apart energy classes linearly. But a scale that extends beyond the alphabet (A+++ to D) led to biased and skewed responses. Color‐coding and information about the scale's range of energy classes provided important contextual information that made environmental judgments more discriminating and more stable. We demonstrate novel behavioral evidence on how such contextual information leads to better understanding of energy labels, with a discussion informed by range‐frequency theory, the cue‐utilization framework, and the heuristics and biases framework. Implications for policy and product marketing strategies with energy labels are discussed.