Household energy use: Applying behavioural economics to understand consumer decision-making and behaviour

By E. Frederiks, K. Stenner, E. Hobman. 2015

930 citations recorded by the source corpus.

Household energy conservation has emerged as a major challenge and opportunity for researchers, practitioners and policymakers. Consumers also seem to be gaining greater awareness of the value and need for sustainable energy practices, particularly amid growing public concerns over greenhouse gas emissions and climate change. Yet even with adequate knowledge of how to save energy and a professed desire to do so, many consumers still fail to take noticeable steps towards energy efficiency and conservation. There is often a sizeable discrepancy between peoples’ self-reported knowledge, values, attitudes and intentions, and their observable behaviour—examples include the well-known ‘knowledge-action gap’ and ‘value-action gap’. But neither is household energy consumption driven primarily by financial incentives and the rational pursuit of material interests. In fact, people sometimes respond in unexpected and undesirable ways to rewards and sanctions intended to shift consumers’ cost–benefit calculus in favour of sustainable behaviours. Why is this so? Why is household energy consumption and conservation difficult to predict from either core values or material interests? By drawing on critical insights from behavioural economics and psychology, we illuminate the key cognitive biases and motivational factors that may explain why energy-related behaviour so often fails to align with either the personal values or material interests of consumers. Understanding these psychological phenomena can make household and community responses to public policy interventions less surprising, and in parallel, can help us design more cost-effective and mass-scalable behavioural solutions to encourage renewable and sustainable energy use among consumers.

Subfields: General Decision Sciences, Management, Monitoring, Policy and Law, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/af5258b28935c04823a4804bd2772f3168bfdffd

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In General Decision Sciences

In Management, Monitoring, Policy and Law

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Citations in the corpus

An investigation into domestic energy consumption behaviour and public awareness of renewable energy in Qatar (2018, background): “Intrinsic motivation occurs when an individual wants to perform a certain act for the reward or benefit associated with the act [10].”
The Socio-Demographic and Psychological Predictors of Residential Energy Consumption: A Comprehensive Review (2015, background): “, message framing, choice architecture and incentives) to target psychological factors such as cost-benefit appraisals and social norms may prove more impactful [104].”
What makes consumers adopt to innovative energy services in the energy market? A review of incentives and barriers (2016, background): “, can be helpful in changing consumer behavior, but they are not enough [25,28,41,57].”
Consumer demand for time of use electricity tariffs: A systematized review of the empirical evidence (2018, background): “Moreover, evidence from fields such as social psychology [50,51], behavioural economics [52] and sociology [53] suggests that people are motivated by a wider range of considerations than just money, as pointed out in another recent review article [54].”
Psychological and Demographic Factors Affecting Household Energy-Saving Intentions: A TPB-Based Study in Northwest China (2020, background): “However, Rehdanz (2007) found that homeowners even consume more energy than renters [53].”
Internal and external barriers to energy efficiency: which role for policy interventions? (2019, background): “The use of loss-framed (rather than gain-framed messages) addresses loss-aversion, reference-dependence, and non-linear probability weighting, because this manipulation makes the loss more salient, memorable, and motivating (Frederiks et al. 2015).”