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Sustainable development requires increasing the energy efficiency, decreasing the growth rates of energy demand, and decreasing the CO 2 emissions. In many countries, households' energy consumption is responsible for a considerable share of total energy demand and CO 2 emissions. Energy-using durables are essential in this context. Aiming at sustainability, private households should buy more energy-efficient durables and use them in a more efficient way. In principle, it might even be economically optimal to buy the more energy-efficient products, since they result in lower total costs over their lifetimethus resulting in a positive net present value (NPV). However, when observing private households' purchase decisions, they often do not correspond to the economic optimum, resulting in an "energy-efficiency gap." This paper investigates into the reasons for the persistence of such a gap between energy-efficient products that would be economically optimal -but from which consumers refrain -and less energy-efficient products that consumers actually own or buy although they entail larger life-cycle costs. Factors, which seem to deter private households from purchasing energy-efficient products with positive NPVs, are, for example, insufficient information, limited attention, or inertia. We will show how these and other factors hinder private households from identifying and realizing their economically optimal choices and how such barriers can be overcome. We will present how properly designed energy labels could help to overcome the information-related causes of inefficiently low energy-efficiency investments and provide some additional policy recommendations that could help reaching the aforementioned goal of a reduction of households' energy demand and CO 2 emissions in an adequate way.

A large body of literature suggests that households could save money by increasing the level of energy efficiency of the energy-using durables they purchase -a so-called "energy efficiency gap". High implicit discount rates estimated from purchases of energy-using durables have generally been interpreted as evidence of such an energy efficiency gap. However, the "discounting gap" between econometrically estimated discount rates and risk-adjusted market interest rates commonly presented in the literature is caused by different factors not all of which portray privately suboptimal purchase decisions by households. In particular, the discounting gap overstates the size of an energy efficiency gap in the choice between efficient and inefficient durables because of estimation and interpretation flaws. This article reviews the factors potentially explaining the observation of a discounting gap in the purchase of energy-using durables.It separates the factors only contributing to a discounting gap from the ones causing an energy efficiency gap to reveal a discrepancy between the size of the estimated discounting gap and the empirical findings of privately inefficient behavior by households.

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