Behavioral Economics for Energy Conservation

8/10/2019 Behavioral Economics for Energy Conservation

1/24

BehavioralEconomics

.YaleUniversity

InnovationsforPovertyAction(IPA)

stickK.com


2/24

1. Lackof

fungibility/mental

accounting

.

3. Losses

loom

larger

than

gains


3/24

Information

Competition

Socialpressure,

civic

duty

and

costs


4/24

maximumsocial

change

,

voluntary

contracts


5/24

Libertarian+Paternalism=Nudge

R c ar

T a er an

Cass

Sunste n TheSimplestNudgeofThemAll


6/24

maybetough

to

do

accountwithouttheirpermission.

.

Forcedchoiceisanotherbetterdefault

Choi andLaibson find

that

this

gets

most

of

the

waythereforsavingsdecisions,e.g.


7/24

SocialComparison:

CharitableFundraising

Example

Sometold:

64%

of

your

peers

gave.

.

Andacontrol,nottoldanything

.

lowgroup

.

Nudge.

Any

old

comparison

does

not

work.


8/24

ToddRogersresearchonvoting

Experts

split

50 50:

1. help,thereislowturnoutcomevoteyour

votereallycounts(i.e.,hasmoremarginal

impact;

what

is

nice

is

here

the

low

social

action

2. highturnout,everyoneisvoting..

ogers

n s

a

mass ve you wor s


9/24

PoliticalReality

Higherprice

Lower

Use

. .

Whattodo?

o ens

usesmentalaccountingnudge

Usestimeinconsistencynudge


10/24

CombiningtheBehavioraland

TraditionalEconomics

Canbe

soft

ompet t ons

Social

contracts,

neighbors,

affinity

groups Canbehard

Financial


11/24

Timeinconsistentpreferences

at oest smean

Yousayyouwanttodosomething.

Butthenyoudonotdoit.

Andthenyouregretnothavingdoneit.


12/24

Vices:

e g t oss

Smoking

Usingtoomuchenergy

Virtues:

Exercise

Completinghome

or

work

projects

Rec clin


13/24

Inconsistency,

Applied

to

Energy Longtermcostsarelooong term

warmglow

in

the

economics

literature,

no

pun

KEY: r ngt e ongtermcosts orwar a t

Maketheshortrunbenefitsbigger

E.g.,

generating

socia

contagion

e ects

Rebatestried,integratedinbill.Effective?


14/24

Consistent

,

Notconsistent,butnotselfaware

eep ssue: ac ac ona e n orma on

Imconsistent,butIthinkpizzahaszerocalories.

Iminconsistent,

but

Ihave

no

mechanism

to

stick

tomyplantochangemyfuturebehavior(i.e.,


15/24

PersonT e#1:Consistent

Externalities

taken

into

account? Shiftpreferencesforcommongood

: ,

PersonType#2:Notconsistent,butselfaware

Idea:Commitment

contracts

Thesepeoplewantfewerchoices,orwanttoraisethepriceofvices.

PersonType#3:Notconsistent,andnotselfaware

Idea:Timelyinformation?Mereattention?Peereducation?


16/24

CommitmentContract

BasicPremise

Couldbe

time

specific

(i.e.,

less

energy

when

out

Couldbecomparedtoprioryears

,neighborhood

word,butcanbeweakandstillwork


17/24

=

Smartmetering

is

one

way

ontractscangetqu tespec c

Time

of

day

(manage

peak

usage)Floororregioninthehome

Evenspecificappliances


18/24

Voluntarily

increase

the

price

of

failure

,

Publicshame

Moneytothosewhosucceedinthecontract(groupcontracts)

Moneytocharity

Moneyto

one s

anti

c arity


19/24

Painof

losing

$2

greater

in

intensity

than

pleasure

Butgainscouldbeneededtogetwidest

artici ation

Pooledcontracts:

Winnerwintheforfeitedfundsofthosewhofail

Tragedyof

the

commons

solved

best

with

smallgroups


20/24

CoreDesign

Individualschoose

agoal

Individualspostabondtocommittotheirgoal(ideally,e.g.,

individualspostthemoneytheywouldspendoncigarettestothe

program)

Bondsare

ooled,

and

those

who

achieve

their

oal

earn

a

ro

ratashareofthepool

Theprogramcanberevenueneutralforthegovernmentorcan

Thewinnerscanbechosenvialotterytoincreaseattentionto

theprogramandheightenitseffectivenessinchangingbehaviors


21/24

ExampleofMonitoringpagefor

e g or oo

or

ommun y

roup


22/24

CampaignStatisticsHomepage


23/24

Download

Your

Cam ai n

Statistics


24/24

Thankyou!

Behavioral Economics for Energy Conservation

Documents

Transcript of Behavioral Economics for Energy Conservation