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Neighbors, knowledge, and nuggets: two natural field experiments on the role of incentives on energy conservation

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  • Dolan, Paul
  • Metcalfe, Robert

Abstract

There is increasing research on the exogenous impact of descriptive social norms on economic behavior. The research to date has a number of limitations: 1) it has not de-coupled the impact of the norm and the knowledge required to understand how to change behavior based upon it; 2) it has exclusively used offline but not online (i.e. emails) methods; and 3) it has not understood the impact of financial incentives in conjunction with norms. We address these three limitations using two natural field experiments. We find, firstly, that norms change energy behavior over a 15 month treatment period irrespective of whether information is provided or not. We find that social norms reduce consumption by around 6% (0.2 standard deviations). Norms have has their largest impact on the day that information on the social norm is received, and then decreases over time. Secondly, we do not find that social norms work online (even with experienced consumers who are used to online billing) - social norms de- livered online may have very little beneficial effects on reducing energy use. Thirdly, we find that large financial rewards work very well online in reducing consumption, with a 0.35 change in energy consumption over a four month period. Perhaps most interestingly, we find that the large effect of financial incentives is completely removed when information on social norms is added online.

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  • Dolan, Paul & Metcalfe, Robert, 2013. "Neighbors, knowledge, and nuggets: two natural field experiments on the role of incentives on energy conservation," LSE Research Online Documents on Economics 51563, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:51563
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    Cited by:

    1. Hunt Allcott & Richard L. Sweeney, 2017. "The Role of Sales Agents in Information Disclosure: Evidence from a Field Experiment," Management Science, INFORMS, vol. 63(1), pages 21-39, January.
    2. Asensio, Omar Isaac & Delmas, Magali A., 2016. "The dynamics of behavior change: Evidence from energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 196-212.
    3. Holladay, J. Scott & Price, Michael K. & Wanamaker, Marianne, 2015. "The perverse impact of calling for energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 1-18.
    4. Broberg, Thomas & Persson, Lars, 2016. "Is our everyday comfort for sale? Preferences for demand management on the electricity market," Energy Economics, Elsevier, vol. 54(C), pages 24-32.
    5. repec:now:jirere:101.00000084 is not listed on IDEAS
    6. Mark Jacobsen & Jacob LaRiviere & Michael Price, 2014. "Public Goods Provision in the Presence of Heterogeneous Green Preferences," NBER Working Papers 20266, National Bureau of Economic Research, Inc.
    7. María Bernedo & Paul Ferraro & Michael Price, 2014. "The Persistent Impacts of Norm-Based Messaging and Their Implications for Water Conservation," Journal of Consumer Policy, Springer, vol. 37(3), pages 437-452, September.
    8. repec:eee:eneeco:v:69:y:2018:i:c:p:204-212 is not listed on IDEAS
    9. Sylvain Chabé-Ferret & Philippe Le Coent & Arnaud Reynaud & Julie Subervie & Daniel Lepercq, 2018. "Can we nudge farmers into saving water? Evidence from a randomized experiment," CEE-M Working Papers 18-10, CEE-M, Universitiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    10. Hunt Allcott & Christopher Knittel, 2017. "Are Consumers Poorly Informed about Fuel Economy? Evidence from Two Experiments," NBER Working Papers 23076, National Bureau of Economic Research, Inc.
    11. Sudarshan, Anant, 2017. "Nudges in the marketplace: The response of household electricity consumption to information and monetary incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 320-335.
    12. Hunt Allcott & Judd B. Kessler, 2015. "The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons," NBER Working Papers 21671, National Bureau of Economic Research, Inc.
    13. Stenner, Karen & Frederiks, Elisha R. & Hobman, Elizabeth V. & Cook, Stephanie, 2017. "Willingness to participate in direct load control: The role of consumer distrust," Applied Energy, Elsevier, vol. 189(C), pages 76-88.
    14. Stefanie Lena Hille, 2016. "The Myth of the Unscrupulous Energy User’s Dilemma: Evidence from Switzerland," Journal of Consumer Policy, Springer, vol. 39(3), pages 327-347, September.
    15. Nicolas Astier, 2016. "Comparative Feedbacks under Incomplete Information," Working Papers hal-01465189, HAL.
    16. Schall, Dominik L. & Mohnen, Alwine, 2017. "Incentivizing energy-efficient behavior at work: An empirical investigation using a natural field experiment on eco-driving," Applied Energy, Elsevier, vol. 185(P2), pages 1757-1768.
    17. Schall, Dominik L. & Wolf, Menas & Mohnen, Alwine, 2016. "Do effects of theoretical training and rewards for energy-efficient behavior persist over time and interact? A natural field experiment on eco-driving in a company fleet," Energy Policy, Elsevier, vol. 97(C), pages 291-300.
    18. Brent, Daniel A. & Friesen, Lana & Gangadharan, Lata & Leibbrandt, Andreas, 2017. "Behavioral Insights from Field Experiments in Environmental Economics," International Review of Environmental and Resource Economics, now publishers, vol. 10(2), pages 95-143, May.
    19. Daniel A. Brent & Corey Lott & Michael Taylor & Joseph Cook & Kim Rollins & Shawn Stoddard, 2017. "Are Normative Appeals Moral Taxes? Evidence from a Field Experiment on Water Conservation," Departmental Working Papers 2017-07, Department of Economics, Louisiana State University.
    20. repec:eee:ecolec:v:148:y:2018:i:c:p:178-210 is not listed on IDEAS
    21. J. Scott Holladay & Jacob LaRiviere & David M. Novgorodsky & Michael Price, 2016. "Asymmetric Effects of Non-Pecuniary Signals on Search and Purchase Behavior for Energy-Efficient Durable Goods," NBER Working Papers 22939, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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