NBER working papers / by by Dora L. Costa and Matthew E. Kahn (NBER Working Paper No. 15939) (RFFers can open this full text version onsite at RFF or by using VPN to access the network and then clicking the URL below.)
http://papers.nber.org/papers/w15939
[Abstract] “Nudges” are being widely promoted to encourage energy conservation. Dora L. Costa and Matthew E. Kahn show that while the electricity conservation “nudge” of providing feedback to households on own and peers’ home electricity usage works with liberals, it can backfire with conservatives. Their regression estimates predict that a Democratic household that pays for electricity from renewable sources, that donates to environmental groups, and that lives in a liberal neighborhood reduces its consumption by 3 percent in response to this nudge. A Republican household that does not pay for electricity from renewable sources and that does not donate to environmental groups increases its consumption by 1 percent.
Matthew Kahn also produces the Environmental and Urban Economics Blog at http://greeneconomics.blogspot.com/
[From Environmental Valuation and Cost Benefit News] Additional information about the study is available in a Slate.com article by Ray Fisman entitled “Nudges Gone WrongA program designed to reduce energy consumption persuaded some Republicans to consume more.” at http://www.slate.com/id/2251658/. This article notes tat Opower, a company that aims to make money by helping utility companies design social nudges to get their customers to conserve, collaborated with a California utility to send a Home Energy Report to 35,000 randomly selected customers. (It came bundled with the household’s regular energy bill.) Each report contained a bar depicting the household’s energy use alongside bars showing consumption for average neighbors and also “efficient” ones. The principle behind highlighting the household’s own use relative to its neighbors is … [that] no one wants to be worse than average. In addition, Opower reinforced the household’s performance by awarding one or two smiley faces for good households and adding the words “ROOM TO IMPROVE” to the charts of energy gluttons.* (The reports also included a few energy-saving tips and suggested what customers might save if they followed them.)
