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Using Economic Incentives to Reduce Electricity Consumption: A field Experiment in Matsuyama, Japan

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  • Kenichi Mizobuchi

    (Department of Economics, Matsuyama University, Japan)

  • Kenji Takeuchi

    (Graduate School of Economics, Kobe University, Japan)

Abstract

This study examines the effectiveness of economic incentives in promoting electricity-conservation behavior among Japanese households. Fifty-three Japanese households participated in a field experiment and were offered monetary rewards depending on their rate of reduction in electricity consumption. To avoid bias in sample selection, which is typically present in previous studies, we adopted a request-based approach for recruiting participants. Results showed that only 34% of the participants succeeded in reducing their electricity consumption, and the average reduction rate was 4.8%. Econometric analysis confirmed that monetary rewards had a positive influence on the electricity conservation behavior, especially of family members who typically stay at home on weekdays. Responses to the questionnaires administered before and after the experiment suggest that participants may have underestimated the marginal costs of the electricity conservation behavior. The efficacy of economic incentives, established in our study, offers a potential measure for encouraging electricity-conservation behavior among Japanese households.

Suggested Citation

  • Kenichi Mizobuchi & Kenji Takeuchi, 2012. "Using Economic Incentives to Reduce Electricity Consumption: A field Experiment in Matsuyama, Japan," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 318-332.
    • Handle: RePEc:eco:journ2:2012-04-10
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    Cited by:

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    3. Quoc Nghi Nguyen & Thi Hong Loc Hoang & Van Nam Mai, 2022. "Applying the Theory of Planned Behavior to Analyze Household Energy-Saving Behavior," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 287-293, September.
    4. Anwar Shah & Karim Khan & Muhammad Zubair, 2019. "Moral Hazard, Monitoring and Punishment: Evidence from a Field Experiment," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 58(2), pages 109-134.
    5. Sloot, Daniel & Scheibehenne, Benjamin, 2022. "Understanding the financial incentive conundrum: A meta-analysis of the effectiveness of financial incentive interventions in promoting energy conservation behavior," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    6. Hussain Ali Bekhet & Lee Lian Ivy-Yap, 2014. "Highlighting Energy Policies and Strategies for the Residential Sector in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 448-456.
    7. Prasanna, Ashreeta & Mahmoodi, Jasmin & Brosch, Tobias & Patel, Martin K., 2018. "Recent experiences with tariffs for saving electricity in households," Energy Policy, Elsevier, vol. 115(C), pages 514-522.
    8. Sekitou, Mai & Tanaka, Kenta & Managi, Shunsuke, 2018. "Household electricity demand after the introduction of solar photovoltaic systems," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 102-110.
    9. Abdul Ghani Albaali & Mohammed Issa Shahateet, 2022. "Energy Applications in Green Building to Fulfil the Goals of Sustainable Development: The Case of Jordan," International Journal of Energy Economics and Policy, Econjournals, vol. 12(6), pages 188-193, November.

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    More about this item

    Keywords

    Economic incentive; Electricity conservation; Household behavior;
    All these keywords.

    JEL classification:

    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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