Limited Attention in Residential Energy Markets: A Regression Discontinuity Approach

Keefer, Quinn A. W.; Rustamov, Galib

doi:10.2139/ssrn.2722145

Cited by 2 publications

(2 citation statements)

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“…According to another study consumers incorrectly infer that high energy efficiency translates to low overall energy use, which may consequently lead them to use energy-efficient products more intensively 20 . Finally, in a quasi-experimental setting, consumers used significantly less electricity during a month following the receipt of a bill that crossed a salient threshold 21 .…”

Section: Inattention and Misconceptionsmentioning

confidence: 95%

Energy-related behaviour and rebound when rationality, self-interest and willpower are limited

Exadaktylos

Bergh

2021

Nat Energy

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The extent to which adopting energy-efficient technologies results in energy savings depends on how such technologies are used and how monetary savings from energy efficiency are spent. Energy rebound occurs when potential energy savings are diminished due to post-adoption behaviour. Here we review empirical studies on how six behavioural regularities affect three energy-relevant decisions and ultimately rebound: adoption of energy-saving products or practices, their intensity of use, and spending of associated monetary savings. The findings suggest that behaviours which reflect limited rationality and willpower may increase rebound, while effects of behaviours driven by bounded self-interest are less clear. We then describe how interventions associated with each of the behavioural regularities can influence rebound and thus serve to achieve higher energy savings. Future research ought to study energy-relevant decisions in a more integrated manner, with a particular focus on re-spending as this presents the greatest challenge for research and policy. (Main text)Energy rebound denotes that potential energy savings of adopting an energy-efficient technology or practice, possibly triggered by some policy, are offset by subsequent behavioural and systemic responses that increase energy use, resulting in diminished net energy savings 1,2 . There are three main types of rebound: direct rebound or intensity-of-use effect -a technology becomes more energy-efficient and thus less costly in its use, causing consumers or producers to use it more intensively; indirect rebound or respending effect -spending less due to using a more energy-efficient technology releases money that is subsequently spent on other products or services that use energy over their life cycle; and economy-wide rebound -more energy efficiency leads to many other changes in the economy, such as investments in expansion of production, impacts on capital and labour markets, and indirectly increases in consumption, all with consequences for energy use. Figure 1 illustrates these rebound types, and their joint impact on energy savings, for the case of switching to a more fuel-efficient car.While there is little doubt that rebound is an important issue that warrants serious attention in policy design, the exact magnitude of rebound effects is surrounded by uncertainty. This is partly the result of the difficulty of assessing rebound empirically, because of a lack of appropriate data and a clear counterfactual, and as rebound lacks unambiguous system and temporal boundaries 3-5 . Estimates for direct rebound range from 0 to 87%, differing between application areas, such as space heating (2-60%), cooling (0-50%) and transportation (5-87%) 5 . Evidence from 33 macrolevel studies shows that economy-wide rebound effects tend to exceed 50%, and may include backfire (>100%) 6 . Among economists, a conventional way to think about rebound is that it results from optimal adjustment to observable and perfectly known changes in marginal costs due to improvements in the ...

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Section: Inattention and Misconceptionsmentioning

confidence: 95%

Energy-related behaviour and rebound when rationality, self-interest and willpower are limited

Exadaktylos

Bergh

2021

Nat Energy

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“…2006). However, it is known that the residential sector is less responsive to a price change than what the policymakers expected because residential customers are inattentive to energy price and consumption (e.g., Keefer and Rustamov 2018, Myers 2019). 2 Thus, governments often seek alternative policies, which do not rely on price‐elastic demand assumption (Sudarshan 2017).…”

Section: Introductionmentioning

confidence: 99%

Repairing a Cracked Mirror: The Heterogeneous Effect of Personalized Digital Nudges Driven by Misperception

Jung

Cho

Shin

2021

Production and Operations Management

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Our study aims to deepen the understanding of personalized digital nudges by evaluating their effects on energy‐saving behavior. We conducted a field experiment with a leading smart metering company in South Korea to investigate whether customers save more energy when a personalized goal and feedback are provided, and how the impacts of nudges vary according to the types of misperception. Specifically, we focused on the behavior of customers who underestimate or overestimate their past electricity usage compared to their actual consumption. We merged daily energy consumption with a pre‐experiment survey for the customers. We found that goal‐setting and feedback mechanisms have a markedly different impact on each type of misperception. Underestimating customers reduced energy consumption only under the “goal‐setting with feedback" treatment. Conversely, overestimating customers reduced energy consumption even under the “goal‐setting without feedback" condition. The underlying mechanism is suggested as updating biased beliefs toward goal achievement. Overall, the results demonstrate that personalized nudges lead to heterogeneous behavioral responses and that service providers and policymakers can use these signals to enrich their planning of behavioral nudges.

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Limited Attention in Residential Energy Markets: A Regression Discontinuity Approach

Cited by 2 publications

References 53 publications

Energy-related behaviour and rebound when rationality, self-interest and willpower are limited

Energy-related behaviour and rebound when rationality, self-interest and willpower are limited

Repairing a Cracked Mirror: The Heterogeneous Effect of Personalized Digital Nudges Driven by Misperception

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