Common Tragedies

Thoughts on Environmental Economics

Energy efficiency and behavioral econ

Posted by Rich Sweeney on April 3, 2008

Normally I’m not a big fan of John Tierney, but this piece from last week was really interesting. Recounting experiments detailed in “Nudge”, Tierney muses over innovative new ways for people to monitor their carbon footprint and show off their environmental piety. Here’s the behavioral evidence that caught my eye:

“Getting the prices right will not create the right behavior if people do not associate their behavior with the relevant costs,” says Dr. Thaler, a professor of behavioral science and economics. “When I turn the thermostat down on my A-C, I only vaguely know how much that costs me. If the thermostat were programmed to tell you immediately how much you are spending, the effect would be much more powerful.”

It would be still more powerful, he and Mr. Sunstein suggest, if you knew how your energy consumption compared with the social norm. A study in California showed that when the monthly electric bill listed the average consumption in the neighborhood, the people in above-average households significantly decreased their consumption.

Meanwhile, the people with the below-average bills reacted by significantly increasing their consumption — not exactly the goal of the project.

That reaction was avoided when the bill featured a little drawing along with the numbers: a smiling face on a below-average bill or a frowning face on an above-average bill. After that simple nudge, the heavy users made even bigger cuts in consumption, while the light users remained frugal.

Tierney goes a little crazy with the jewelry stuff towards the end, but overall I like the idea of thinking outside the box when it comes to monitoring energy use.

3 Responses to “Energy efficiency and behavioral econ”

  1. Shannon said

    There are a few products on the market that will do that now. Some of them hook up to the electrical box and some to individual outlets. Then there’s the “orb”. The rationale, that people respond better to constant stimulus than they do to a periodic one, is especially interesting considering that global warming has been attributed to a human inability to sense growing danger (the frog in the kettle analogy that Gore uses).

  2. Stonehead said

    I’m not a big fan of gadgets, but a meter that encouraged less energy consumption in this way would be a massive boon. I hoping to get one of those clip-on energy monitors at some point, but in the meantime I read our electricity meter weekly. I then check if we’re on target or not. We’ve managed to cut our energy use by 10-12% a year for the past three years—despite being a small farm as well as a household—but can’t go much further without doing away with things that we genuinely need (eg we have capped our washing machine use and use cold water cycles, but to do away with would mean hours spent hand washing).

    To have a meter that showed at a glance if we were on target for any given time period would make life much easier and allow immediate responses when consumption edged up.

  3. […] online “league” for commuters who religiously note their bike-computer readouts. Sure, behavioral economics teaches us that the right amount of feedback, peer pressure, and competition can motivate people to […]

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