Measuring household ability to adopt new technology: The case of light-emitting diodes (LEDs)

Abstract Differences in the adoption of light-emitting diodes (LEDs) across households have not been fully investigated. Using the microlevel data of Japanese households, we identify the determinants of LED adoption. We take two approaches in the empirical analysis. In the first approach, we define the adoption stage of each household based on whether LEDs are installed in different types of rooms. We then analyze the relationship between the adoption stage and household characteristics based on the ordered logit model. In the second approach, we apply the item response theory method to assess the household’s ability to adopt LEDs. We then analyze the relationship between household adaptability and characteristics based on the two-sided truncation model. We find that the impacts of household characteristics on LED adoption are similar between the two approaches: low-income households do not use LEDs; household heads aged 65 to 74 are active in LED installation, although those older than 75 are less active; people living in old or rented houses do not use LEDs. Finally, we find a large variation in LED installation across prefectures.

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