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The role of social information, incentives, and habits in household electricity consumption

English title The role of social information, incentives, and habits in household electricity consumption
Applicant Goette Lorenz
Number 153675
Funding scheme NRP 71 Managing Energy Consumption
Research institution Département d'économie (DE) Faculté des Hautes Etudes Commerciales (HEC) Université de Lausanne
Institution of higher education University of Lausanne - LA
Main discipline Economics
Start/End 01.11.2014 - 31.12.2017
Approved amount 228'560.00
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All Disciplines (2)

Discipline
Economics
Psychology

Keywords (4)

field experiments; household behavior; behavioral economics; electricity consumption

Lay Summary (German)

Lead
Wie können Smart Meters intelligent eingesetzt werden und Individuen in ihrem Bestreben, Energie zu sparen, eingesetzt werden? In diesem Forschungsprojekt untersuchen wir die Wirksamkeit von drei Verhaltensmechanismen: Information über den eigenen Stromverbrauch und den Stromverbrauch anderer, Anreize zum Energiesparen, sowie die Macht von etablierten Konsumgewohnheiten. Wir benutzen innovative Technologien um die in Elektrizitätswerken bereits vorhandenen Informationen über den Energiekonsum an die Konsumenten zurückzuschicken.
Lay summary

Wie können Energiekonsumenten zum Energiesparen motiviert werden? Wie können Verhaltensänderungen induziert und beibehalten werden? Diese Fragen spielen in der Umsetzung der Energiewende 2050 eine zentrale Rolle. In diesem Forschungsprojekt bieten wir neue und originelle Ansätze, diese Fragen anzugehen und effektive Politikempfehlungen abzuleiten.  

  • Smart metering und soziale Information: Neue Entwicklungen in IT erlauben es, Informationen die über installierte Smart Meters von Elektrizitätswerken bereits gesammelt werden, den Kunden zurückzuschicken. Diese können auch mit Informationen über den Verbrauch und das Zeitprofil des Verbrauchs anderer Haushalte kombiniert werden und bieten vielseitige Möglichkeiten, den Haushalten mehr Information anzubieten.
  • Energiesparen und die Macht der Gewohnheit: Gewhonheiten spielen in vielen Bereichen unseres Lebens eine zentrale Rolle. In einem Teilprojekt versuchen wir, dies zum Energiesparen zu nutzen. Wir stossen Individuen zu einer Verhaltensänderungen und Energieeinsparung ein mittels eines einmaligen Bonus. Dies erlaubt uns dann zu sehen, wieviel dieser Verhaltenänderung erhalten bleibt wenn der Bonus nicht mehr bezahlt wird. 

Dieses Projekt nutzt bereits installierte Smart Meters von Elektrizitätswerken in der Schweiz und testet effiktive Methoden des Konsumentenfeebacks. Es entwickelt in enger Kooperation mit den Elektzizitätswerken neue, praxisbezogene Interventionen, die flächendeckend eingesetzt werden können.

 

 

Direct link to Lay Summary Last update: 17.10.2014

Responsible applicant and co-applicants

Employees

Name Institute

Collaboration

Group / person Country
Types of collaboration
RWE Deutschland AG Germany (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Research Infrastructure
Rheinisch-Westphälisches Institut für Wirtschaftsforschung Germany (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Publication
- Research Infrastructure

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
NFP 71 Workshop: Behavioral Change in Energy Consumption Talk given at a conference Disaggregated Consumption Feedback and Energy Conservation – Evidence from a Randomized Controlled Trial 05.10.2017 Zürich, Switzerland Goette Lorenz;
Human Dimensions of Environmental Risks Talk given at a conference Behavior-specific real-time feedback on resource use: conservation effects, behavioural mecha- nisms and policy implications 22.05.2017 Monte Verità, Ascona, Switzerland Goette Lorenz;


Knowledge transfer events

Active participation

Title Type of contribution Date Place Persons involved
Working meeting on behavioral economics approaches to energy efficiency Workshop 03.10.2018 Northwest Community Development Council, Singapore Goette Lorenz;
Working meeting on behavioral economics approaches to energy efficiency Workshop 21.05.2018 Housing Development Board, Singapore Goette Lorenz;
Journée Dialogue – "Transformation du système énergétique" Talk 17.11.2017 Yverdon, Switzerland Goette Lorenz;
Working meeting on behavioral economics approaches to energy efficiency Workshop 31.10.2017 Energy Market Authority, Singapore Goette Lorenz;
FRS Forum: Choice Architecture for a More Resilient Singapore Talk 28.07.2017 Future Resilient Systems Center, Singapore Goette Lorenz;


Abstract

How can consumers be motivated to reduce energy consumption? How can behavior change be induced and maintained? Answers to these questions are central to implement the Swiss Energy Strategy 2050 and they require a detailed understanding of what social and psychological mecha-nisms drive households’ energy consumption. Studies suggest that households have a poor un-derstanding of how to save energy (e.g., Attaria et al., 2010). Nevertheless, behavioral interventions with households are often a very cost-effective way of influencing electricity con-sumption (Allcott and Mullainanthan, 2010). Energy conservation is driven by economic incen-tives, but also in important parts by pro-social motivations and by information about one’s energy use. A better understanding of how incentives, information and behavioral habits can be used to conserve energy is thus of vital interest of policy and academic research alike. In this project, we plan to address these issues by focusing on behavioral interventions using a novel way to communicate with electricity consumers: a) Smart Metering and social information: Evidence suggests that even relatively low-frequency feedback on how one’s consumption compares to other households can foster ener-gy savings (e.g., Allcott and Rogers, 2013; Degen et al., 2013). But these studies use uni-directional and minimal feedbacks in the form of mailings. Recent innovations have created technologies through which such feedback can be made available to consumers electronically and rapidly, and in an interactive form. Such a presentation of social information motivates households to realize and maintain even larger savings, and it creates an opportunity to better understand the underlying psychological mechanisms. b) Energy-saving bonuses and habit formation: Evidence shows that financial incentives, if carefully used, can motivate more pro-social behavior (Ariely et al., 2009; Goette and Stutzer, 2013; Lacetera et al., 2013). Furthermore, evidence also indicates that habit formation is an important component of pro-social behavior (Meer, 2013; Goette et al., 2013, Alcott and Rog-ers, 2013): once a behavior has been established, it persists over time. If energy conservation has a habit-forming aspect, motivating individuals to save energy once can have long-lasting effects on household behavior. Evidence is mixed as to whether this is possible (Allcott and Rogers, 2013). In this project, we propose to use an innovative bonus contract that provides strong incentives to reduce energy consumption during one year. Habit formation could poten-tially leverage the effectiveness of the bonus to achieve behavior change to last beyond the ap-plication of the incentives, and our project will allow us to address this issue. This project proposes a comprehensive, systematic, and rigorous evaluation of these mechanisms. It builds on the applicants’ previous experience with smart metering projects (ewz Smart Metering Feldstudie; SMF) and their work on incentives and habit formation in pro-social preferences. It tests new and promising mechanisms to achieve quantitatively meaningful behavior change based on novel insights from behavioral research in economics and psychology. The project relies on novel technologies and it accompanies the implementation with detailed survey and choice exper-iments among the participating households. The project is also very cost-efficient and policy rele-vant: it takes advantage of smart meter infrastructure already deployed in Switzerland, and will thus establish close collaborations with electricity utilities. It compiles this information in a tech-nologically sophisticated, and provides it in a simple and intuitively appealing interface to con-sumers.
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