American Economic Review · 2014 · 1.3K citations · 75 references
Natural ResourcesPharmacoeconomicsPublic PolicyBehavioral EconomicsEnergy EconomicsEnergy ManagementBehavior Change StrategiesBehavioral InterventionsEnergy ConservationEnergy Conservation BehaviorEnergy Conservation StrategiesEnergy Policy AnalysisBehavioral Change In Energy UseConsumer Energy BehaviorCost-effectivenessEnergy Conservation PoliciesHome Energy ManagementHome Energy Use FeedbackResidential Energy ConservationResidential Energy Efficiency
The Opower program sends social‑comparison energy reports to more than six million households nationwide. Initial reports trigger frequent action and backsliding that fades over time, yet even after two years of discontinued reports, effects persist with a 10–20 % annual decay and consumers continue to respond, indicating that prior conservative assumptions underestimated cost‑effectiveness and that empirical estimates can guide program optimization.
We document three remarkable features of the Opower program, in which social comparison-based home energy reports are repeatedly mailed to more than six million households nationwide. First, initial reports cause high-frequency “action and backsliding,” but these cycles attenuate over time. Second, if reports are discontinued after two years, effects are relatively persistent, decaying at 10–20 percent per year. Third, consumers are slow to habituate: they continue to respond to repeated treatment even after two years. We show that the previous conservative assumptions about post-intervention persistence had dramatically understated cost effectiveness and illustrate how empirical estimates can optimize program design.(JEL D12, D83, L94, Q41)
75
A Theory of Rational Addiction
Gary S. Becker, Kevin Murphy · Journal of Political Economy · 1988 · 3.8K citations