To be aware of the potential for energy savings in their homes, individuals need specific energy-related and financial knowledge. In addition, they also need the cognitive skills to apply this knowledge, for example when it comes to the calculation of the lifetime cost of household appliances or energy-efficient renovations. This set of knowledge and skills is related to two literacy concepts, i.e. energy and financial literacy. In this paper, we propose a new concept of literacy that we call "energy-related financial literacy". Further, we present information on the level of financial literacy as well as on the level of energy-related financial literacy for a sample of European households. In the empirical part of the paper we estimate several ordered probit models in order to analyse the determinants of the level of energy-related financial literacy, with a particular interest to understanding the role of gender. Our results show that the level of energy-related financial literacy is relatively low and heterogeneous across the European countries. Moreover, the results confirm previous findings about the gender gap in financial literacy, with males being associated with higher levels of the index. We also identify such a gender gap for energy-related financial literacy.

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The literature on the energy-efficiency gap discusses the status-quo bias as a behavioral anomaly that potentially increases the energy consumption of a household through at least three channels: (1) by making consumers keep their energy-using durables as long as possible, until wearout forces them to replace their equipment (2) by making consumers choose new energy-using durables that resemble the existent ones that need replacement, and (3) by making consumers overuse appliances in an attempt to mentally amortize the initial investment cost. The results presented in this study are an attempt to empirically investigate the extent to which the presence of a bias towards the status quo is linked to residential electricity consumption through two out of the above mentioned three channels: non-replacement of old appliances and overuse of appliances. Using data from a large household survey conducted in three European countries, we find that our measure of status-quo bias is a significant predictor of both the age of home appliances as well as the level of consumption of energy services of a household. The tendency of status-quo biased individuals to keep their appliances longer and to use them more intensely is also reflected in the total electricity consumption of their households, which is found to be around 5.7% higher than for households of non-biased individuals. This research thus provides some first empirical evidence that the status-quo bias has the potential to create a substantial barrier to increasing residential energy efficiency. Our findings prompt policy makers to design instruments that take this barrier into account.