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Using Behavioral Economics to Promote Resource Conservation

Paper Session

Sunday, Jan. 5, 2020 8:00 AM - 10:00 AM (PDT)

Marriott Marquis, Grand Ballroom 1
Hosted By: American Economic Association
  • Chair: Lorenz Goette, University of Bonn

Information Provision and the Potential of Targeting - Evidence from Residential Energy Conservation

Mark Andor
,
RWI Essen
Andreas Gerster
,
University of Mannheim
Jorg Peters
,
RWI-Leibniz Institute for Economic Research and University of Passau
Christoph Schmidt
,
RWI-Leibniz Institute for Economic Research and Ruhr-University Bochum

Abstract

This paper studies the effects of an intervention that randomized information letters about savings potentials of energy efficient investments and behaviors among 130,000 German households. We test whether the framing of information in environmental or monetary terms matters. We find that the average effect size is small, irrespective of the framing. By exploring the heterogeneity of treatment effects, we show that certain subgroups are very responsive and illustrate how optimal targeting based on machine learning techniques can substantially improve the cost-effectiveness of the intervention. While our findings suggest that information provision is not the panacea to curb electricity consumption, we contribute to the discussion on how to optimize information campaigns by targeting highly responsive consumers.

Peer Effects in Water Conservation: Evidence from Consumer Migration

Bryan Bollinger
,
Duke University
Jesse Burkhardt
,
Colorado State University
Kenneth Gillingham
,
Yale University

Abstract

Social interactions are widely understood to influence consumer decisions in many choice settings. This paper identifies causal peer effects in water conservation during the growing season, utilizing variation from consumer migration. We use machine learning to classify high-resolution remote sensing images to provide evidence that conversion to dry landscaping underpins the peer effects in water consumption. We also provide evidence that without a price signal, peer effects are muted, demonstrating a complementarity between information transmission and prices. These results inform water use policy in many areas of the world threatened by recurring drought conditions.

The Role of Goals in Motivating Behavior: Evidence from a Large-Scale Field Experiment

Sumit Agarwal
,
National University of Singapore
Ximeng Fang
,
University of Bonn
Lorenz Goette
,
University of Bonn
Samuel Schoeb
,
University of Bamberg
Tien Foo Sing
,
National University of Singapore

Abstract

Goal-setting is ubiquitous in the modern digitized world abundant with quantifiable information about individual behavior. A large literature in psychology demonstrates that goals can motivate effort even when not tied to explicit incentives. Yet, few studies establish the relevance of goals using field evidence, and there is little guidance on how to incorporate goal-setting into economic decision-making and policy frameworks. We provide causal evidence on the impact of goals and feedback on behavior from a large-scale field experiment in the context of resource conservation in the shower. We randomly assign exogenous goals coupled with real-time feedback via smart meters and collect fine-grained behavioral measures over a duration of up to 6 months. Our main findings are as follows: (i) while feedback alone already induces large conservation efforts, goal-setting increases this savings effect substantially; (ii) effects remain stable over time; (iii) the relationship between goal difficulty and effort appears to be non-monotonic but reverse U-shaped instead; (iv) hazard rates of individual showers suggest that effort is particularly strong when a goal is in sight (bunching) but quickly dies off as soon as it becomes out of reach. These results are best explain by a fixed-penalty model instead of a loss-aversion model with goals as reference points.

Residential Water Conservation During Drought: Experimental Evidence from Three Behavioral Interventions

Katrina Jessoe
,
University of California-Davis
Gabriel Lade
,
Iowa State University
Frank Loge
,
University of California-Davis
Edward Spang
,
University of California-Davis

Abstract

This paper deploys a framed field experiment and uses high frequency data to evaluate the short- and long-run effects of three behavioral interventions on residential water use during extreme drought. Our study of the effects of Home Water Reports (HWRs) on hourly water use yields three main results. First, even when layered on top of a 25% drought conservation mandate, HWRs led to conservation effects of 4 to 5%. Second, across all three treatments the profile of water conservation is similar, suggesting that households did not respond to the messaging or recommendations contained in the HWRs. Third, the water conservation effect of all interventions dissipated five months after the intervention ended. In our setting, these behavioral interventions aligned with utility incentives to achieve immediate but temporary water conservation in response to drought.
Discussant(s)
Lorenz Goette
,
University of Bonn
Michael Price
,
University of Alabama and NBER
Andreas Lange
,
University of Hamburg
Kenneth Gillingham
,
Yale University and NBER
JEL Classifications
  • Q4 - Energy
  • D9 - Micro-Based Behavioral Economics