Tools- of Changes

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

Norms change energy consumption irrespective of whether information is provided or not. Large financial rewards also reduce energy consumption, and the effect persists even after the incentive has been removed. However, it completely disappears when information on social norms is included.

This study found that norms change energy consumption irrespective of whether information is provided or not. It found that social norms reduce consumption by around 6% (0.2 standard deviations).

Secondly, the study found that large financial rewards for targeted consumption reductions work very well in reducing consumption (8% reduction - 0.35 standard deviations). The effect persists even when the financial incentive has been removed, suggesting no crowding out of financial incentives. However, it completely disappears when information on social norms is included.

The findings are based on two randomized field experiments in the United Kingdom - one involving 569 households in London and the other involving 2,142 households throughout the UK.