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02.05.2019

Completed project: Behavioural mechanisms of household electricity consumption

The image shows four power sockets.

This project examined the energy-saving potential of providing households with more detailed feedback about their electricity consumption.

Incomplete information and limited attention are two key obstacles to making resource-efficient choices. In the context of electricity use, it has been hypothesised that the rollout of smart meters would improve information and sharply reduce energy use. However, evidence indicates that smart metering in countries with moderate baseline consumption, such as Switzerland, Germany or Austria, reduces energy use by only about 3 percent.

The aim of this NRP 71 research project “Behavioural mechanisms of household electricity consumption“, which was led by Prof. Lorenz Goette from the University of Bonn, was to test whether behaviour-specific feedback can help in increasing these moderate conservation effects, and whether feedback combined with behaviour-specific incentives to conserve electricity can further reinforce conservation efforts. For this purpose, a large-scale field experiment was conducted, using data from more than 1000 private households. All experimental groups receive a smart phone app that provides them with feedback on their electricity use. Five experimental groups with differing feedback and incentives were formed.

No significant conservation effects were found when providing aggregate information on electricity use alone. However, the results are not significantly different from other studies which find small (2% - 3%) conservation effects for comparable households. By contrast, there are significant and quantitatively important increases in energy efficiency found for all groups providing behaviour-specific feedback: households reduce electricity consumption by 6% to 10% compared to aggregate feedback. Thus, adding behaviour-specific feedback roughly triples the conservation effects compared to typical estimates for aggregate smart metering information. Consistent with previous research, one also finds that households with high baseline use save significantly more energy in response to behaviour-specific feedback.

There are no significant differences in conservation effects across the four groups receiving behaviour-specific feedback. Thus, adding financial incentives to encourage electricity conservation neither increases nor decreases conservation efforts compared to the group receiving only disaggregated feedback. These results suggest that attention is a key mechanism to sustain conservation effects.

The results also show pronounced time-of-day patterns. Conservation effects from disaggregated feedback are largest during the hours when households are at home and have the highest electricity use. They are essentially zero for all other hours. During peak hours, behaviour-specific feedback reduces electricity use by 10% to 20%.
A strong pattern of habit formation wasn’t found. By contrast, it was shown that, when households receive fewer messages from the smart phone app, treatment effects become weaker. This again suggests that attention is a key mechanism to help households conserve energy.

Further information on this content

 Contact

Prof. Lorenz Goette University of Bonn Institute for Applied Microeconomics Adenauerallee 24-42 D-53113 Bonn +49 228 73-9240