Blind spots in policy analysis: What economics doesn't say about energy use

TLDR

The article highlights challenges in applying economic theory to energy‑use analysis. The study proposes two strategies—enhancing existing models with economic theory and adopting a problem‑oriented, cross‑disciplinary approach—to improve energy‑use analysis. It finds that economic theory alone narrows analysis, overlooking key determinants and policy options, and that incorporating behavioral sciences can reduce blind spots, though systematic application remains difficult.

Abstract

Abstract This article describes the difficulties of reducing analysis of energy use to an application of economic theory. It shows how economic concepts of behavior direct attention selectively to some important determinants of consumer behavior and away from others; how available economic accounts of short‐term change in energy use, investment in energy efficiency, and the dynamics of investment limit understanding and narrow analysts' vision; how promising policy options are overlooked as a result; and how concepts and knowledge from the noneconomic behavioral sciences can compensate. Two strategies are discussed for improving analysis. Using economic theory to guide the improvement of existing models can help, conceptual blind spots will remain. A problem‐oriented approach drawing on concepts and methods from across the behavioral sciences can avoid the blind spots, but cannot be systematic. Analysis can be improved by using both approaches in concert; some implications of a combined strategy are sketched.