The Role of Information and Credit Constraints in Household Demand for Second-Hand Electrical Appliances: Evidence from a Randomized Controlled Trial in Ghana

Many low-income households in developing countries spend a sizeable proportion of their income on energy largely due to the use of secondhand electrical appliances which are energy inefficient. This deprives them of necessities including food and medicines while exacerbating poverty. To encourage the use of new appliances that are more energy efficient, the Ghana Energy Commission introduced legislation to enforce the minimum energy efficiency standards for household appliances and to discourage the use of second-hand appliances. However, the response from households and dealers of second-hand appliances has been poor. In this study, we use a randomized controlled trial in the Greater Accra Metropolitan Area to investigate if information and credit constraints prevent households from buying new appliances, irrespective of the long-term benefits. Analysis of these issues is quite important as it will support policy choices in the use of new appliances, strengthen the development and implementation of energy efficiency measures through efficiency standards and labeling, contribute to the implementation of three components of the sustainable development goals, namely, affordable and clean energy, no poverty, and climate action.