An Unlikely Efficiency Tool: Behavioral Psychology
We are our own biggest source of energy. At least, that’s the idea behind United Illumination and the Connecticut Energy Efficiency Fund’s latest innovations in energy efficiency campaigns. UI and the Connecticut Energy Efficiency Fund have teamed up with a company called OPOWER to help drive participation in energy efficiency efforts by harnessing the latest insights from behavioral psychology.
Energy efficiency is increasingly being viewed as an important resource. Twenty-four states around the country have passed legislation mandating reductions in energy demand, and policymakers and utilities have long known that giving customers information about their energy demand helps them reduce their use. However, those charts and graphs that arrive with each monthly electricity bill tracking a customer’s energy usage only go so far. Traditional household buy in to energy efficiency programs has often been disappointingly low.
An illustration on this point is illuminating. Let’s say a utility wants to encourage customer buy-in to an energy efficiency programs. It develops three hanging flyers, or “hangers” to place on customers’ doorknobs touting the various benefits of energy efficiency. One explains the environmental benefits; one explains the money that a customer could save by using energy more efficiently; and one explains that the customers’ neighbors are using energy more efficiently, and they should too.
Which of the hangers would encourage the most participation? The cynics among us would probably expect that the majority of customers would be driven by economics. What rational person would pass up free money in the form of a lower electric bill?
As it turns out, more people than you would think. Research has shown that more people are influenced to participate in energy efficiency programs simply because their neighbors are, and not purely because of financial gain.
Economic theory dictates that people always act in their self interest and make rational decisions. Behavioral psychology is a field that recognizes people are a little more idiosyncratic than “Homo economicus,” that fictional character from macroeconomics classes who always makes rational decisions. Often, the decisions we make are driven not by rational thought, but by bias, emotions, and social pressures.
By understanding that people’s actions are shaped by their perception of what those around them are doing, energy efficiency programs can be designed in a way to maximize participation. That old excuse that “everybody else was doing it” might be more powerful than the parents of teenagers around the country ever imagined.