Neighbors, Knowledge, and Nuggets: Two Natural Field Experiments on the Role of Incentives on Energy Conservation

41 Pages Posted: 4 Apr 2015 Last revised: 17 Apr 2015

See all articles by Paul Dolan

Paul Dolan

London School of Economics & Political Science (LSE)

Robert Metcalfe

University of Chicago - Becker Friedman Institute for Economics

Date Written: April 2, 2015

Abstract

There is increasing research on the impact of social norms on economic behavior. The research to date has a number of limitations: 1) it has not de-coupled the impact of the norm and the knowledge required to understand how to change behavior based upon it; and 2) it has not understood the impact of social norms under different incentive structures. We address these limitations using two natural field experiments. We find, firstly, that norms change energy consumption irrespective of whether information is provided or not. We find that social norms reduce consumption by around 6% (0.2 standard deviations). Secondly, we find that large financial rewards for targeted consumption reductions work very well in reducing consumption, with a 8% reduction (0.35 standard deviations) in energy consumption. The effect persists even when the financial incentive has been removed, suggesting no crowding out of financial incentives. Perhaps most interestingly, we find that the large effect of financial incentives completely disappears when information on social norms is included.

Keywords: social norms, information, financial incentives, natural field experiment, energy consumption

JEL Classification: D01, D03, D83, Q41

Suggested Citation

Dolan, Paul and Metcalfe, Robert, Neighbors, Knowledge, and Nuggets: Two Natural Field Experiments on the Role of Incentives on Energy Conservation (April 2, 2015). Becker Friedman Institute for Research in Economics Working Paper No. 2589269. Available at SSRN: https://ssrn.com/abstract=2589269 or http://dx.doi.org/10.2139/ssrn.2589269

Paul Dolan

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Robert Metcalfe (Contact Author)

University of Chicago - Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

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