RMIT research has found that the design of Australia’s car fuel labels needs to change to meet the growing consumer demand for environmentally-friendly products.
Dr Adrian Camilleri, from the School of Economics, Finance and Marketing has collaborated with researchers at Columbia University and Duke University to investigate how displaying information about a product’s attributes plays an important role in improving consumer choice.
In a series of three experiments, several hundred participants were presented with a number of cars to choose between.
Researchers found that the likelihood of preferring a fuel-efficient car increased with participants’ pro-environmental values but only when an environmental attribute (such as a 1-to-10 greenhouse gas rating) was presented.
Camilleri explained that a car’s fuel economy can be expressed in different ways.
“The mandated label in the United States expresses fuel economy in terms of miles travelled per gallon of fuel, the estimated annual fuel cost, and a 1-to-10 greenhouse gas rating,” he said.
“These different expressions are closely related to each other and highly correlated. For example, a car with a greater fuel mileage will have a lower annual fuel cost and a better emissions rating.
“However, even though these measures are closely related, research shows that if this information is only presented one way consumers will overlook key personal objectives when making purchasing decisions.”
Camilleri identified that a fundamental decision faced by policy makers is to determine how much information should be presented to consumers in order to help them make better choices.
“On one hand more information could be overwhelming. On the other, not enough information could deprive consumers of important facts,” he said.
“Our research shows that the number and type of attributes presented on labels have an impact on consumer choice.
“Expressing fuel economy in multiple ways can increase preference for the option that is better aligned with a consumer’s objectives. For instance, it helps those with pro-environmental attitudes to make more fuel-efficient choices. “
This research has broad application because many other product labels include multiple translated attributes. For instance food labels describe nutrients in terms of amount per serving (eg. 55 mg of Sodium) as well as a percentage of recommended daily values.
While home appliances (such as air-conditioning units) state estimated yearly electricity use in kilowatt-hours as well as estimated yearly operating cost in dollars.
Although the study involved a number of experiments on US fuel labels the results have implications for Australia.
“Our fuel economy labels have a lot of room for improvement and currently,” Camilleri said.
“In Australia the labels focus on fuel consumption in terms of litres per 100km and grams of CO2 emissions per kilometre.”
“These labels would be more effective if they also expressed the expected cost of fuel over a much larger scale and included a more meaningful environmental impact score.”
The paper, Translated attributes: Aligning consumer’s choices and goals through signposts, will be published in the academic journal Management Science.
Story: Ainslie Logsdon