An Analysis of Power Content Label Designs

Abstract

<p>There are currently 22 states with full or partial disclosure requirements for their electricity suppliers. These requirements differ significantly across states, in terms of the specific information content, structure, and presentation, but all have the potential of increasing customers' awareness about the links between their electricity consumption and air emissions, and perhaps create incentives for utilities to reduce those emissions or for customers to reduce their consumption or to switch to a different electricity supplier.</p><p>How effective this policy has been is still unclear. The main criterion for effective communication strategies is that they include relevant information for the readers in a usable form. Information needs as well as the ability to process and apply it vary significantly across individuals. However, people are limited in their information-processing capabilities. Policy makers therefore face the trade-off between a large amount of potentially relevant information that ideally needs to be included on the label on the one hand, and decrease in usability as more information is included on the label, on the other. </p><p>This paper examines the design, readability and usability of sample labels from 18 different states with information disclosure requirements. The labels are compared and rated according to how they balance the two main dimensions of label design, information content and usability, demonstrating the difficult trade-off between the two. In addition to this, the labels are analyzed along several key aspects: information load, focus on environmental impact, comparability, understandability, and materiality of information. As part of the analysis, measures for these different aspects of label effectiveness are created. The main finding of the analysis is that there are difficult trade-offs between information content and label usability. However, this trade-off can partially be avoided by carefully designing the labels, easing the cognitive burden of users while still conveying relevant information to the decision maker.</p><p>The results of the analysis can help evaluate the various existing disclosure policies, and offer approaches to improve upon them. It will also be shown that while preferred levels of information content are incommensurate with maximum usability, certain structures and form elements succeed at making more complex information content easier to use, improving the overall performance of the labels.</p>