Energy Conservation “Nudges” Shaped by Political Ideology

Dora L. Costa and Matthew E. Kahn in Vox EU (via the Monkey Cage):

Residential electricity consumption represents roughly 35% of California's total electricity demand. Conservation by consumers would both reduce greenhouse gas emissions and economise on the construction of costly new power plants. But how can we encourage conservation?

Behavioural economists have promoted the use of “nudges” to encourage energy conservation (Allcott and Mullainathan 2010 and Thaler and Sunstein 2008). “Nudges” offer a politically palatable alternative to stricter building codes and price increases. Research by Allcott (2009), Ayers et al. (2009), and Schultz et al. (2007) found that providing feedback to customers on home electricity and natural gas usage with a focus on peer comparisons decreased consumption by 1% to 2%, potentially saving 110 million kWh per year if feedback were provided to all of the utility’s customers (Ayers et al. 2009).

Conservatives and conservation

In recent research, we present evidence that behavioural economists have underestimated the role that ideological heterogeneity plays in determining the effectiveness of energy conservation nudges.

We find that the effectiveness of energy conservation nudges depend on an individual’s political views. Although liberals and environmentalists are more energy efficient than conservatives (Costa and Kahn 2010b) – thus making it harder for them to reduce consumption further – we find that liberals and environmentalists are more responsive to these nudges than the average person. In contrast, for certain subsets of Republican registered voters, we find that the specific “treatment nudge” that we evaluate has the unintended consequence of increasing electricity consumption.

People who refuse the “treatment” of a feedback nudge or do the opposite of what the nudge is meant to encourage are known in the literature as “defiers” (Freedman 2006). But there are few specific examples of what motivates the defiers. We argue that political ideology may provide one explanation; an energy-conservation nudge may be ignored by conservative Republicans. Some may increase their consumption as they learn that their past consumption was “low” relative to others.