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Goal Setting and Energy Conservation

Author

Listed:
  • Matthew Harding

    (Department of Economics, Stanford University)

  • Alice Hsiaw

    (Department of Economics and Accounting, College of the Holy Cross)

Abstract

This paper develops a theoretical model of consumer demand for an energy conservation program that involves non-binding, self-set goals. We present evidence from a Northern Illinois goal-setting program, aimed at reducing residential electricity consumption, that is difficult to reconcile with standard preferences and is broadly consistent with a model of presentbiased consumers with reference-dependent preferences. We find that the need for commitment is correlated with program adoption, higher pre-adoption consumption, and lower responsiveness to goals. Consumers choosing realistic goals persistently save substantially more, achieving savings of nearly 11%, than those choosing very low or unrealistically high goals.

Suggested Citation

  • Matthew Harding & Alice Hsiaw, 2014. "Goal Setting and Energy Conservation," Working Papers 1403, College of the Holy Cross, Department of Economics, revised Aug 2014.
    • Handle: RePEc:hcx:wpaper:1403
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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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