Should we nudge or boost energy conservation?

Encouraging people to be more efficient with their energy usage is crucial to help tackle climate change.

With some challenges along the way: how do we make such an invisible commodity more tangible for people? How do we translate pro-environmental intentions into real actions? And what behavioural tool(s) should we implement?

Going beyond traditional tools

Over the past decades, policymakers have relied largely on traditional interventions — inspired by economic pricing strategies and regulation — that consider individuals as purely rational beings. But people are a bit more complex. In the context of energy consumption for instance, several studies have shown that the prospect of a lower bill is not enough to get people to reduce their consumption. A famous example by Opower (2011) demonstrated that pricing strategies are not the primary force to change consumers’ behaviour, but that social comparison is a more effective way to encourage energy consumption reduction, and this despite the claim by many households that social norms have little influence on their behavior.

Behavioural science can change the way we look at sustainability in general, and energy conservation in particular, by considering and integrating cognitive biases and heuristics into the design of interventions and policies. The work of Thaler and Sunstein (2008) about the role of nudging in shaping public policy is a good illustration of this.

But more recently, another tool appeared: the ‘boost’. While nudges shape human decisions by changing the choice set, boosts are interventions aiming to develop individuals’ competencies and motivation to behave in a certain way by improving their skills and knowledge. In addition to presenting accurate information and to changing the availability of options, boosts work by empowering people to make better decisions that align with their personal goals and preferences. Let’s dive deeper into those two types of behavioural interventions.

Nudges and boosts: brothers from another mother

How can we consider the use of these two tools in the context of energy conservation? The first step of any intervention is to identify the target behaviour. And broadly speaking, there are three types of energy behaviours:

• Curtailment behaviours include small and repetitive actions such as switching off appliances.
• Maintenance behaviours imply ensuring that the household’s electrical equipment is in good condition.
• Investment behaviours which can include both short-term investments, like the purchase of LED bulbs, and important and longer-term investments, such as home renovation and retrofitting.

Why is this distinction important? Because policymakers, and energy suppliers, must choose what to do and what to achieve based on the type of behaviour they want to encourage. Practically speaking, depending on the target behaviour, the degree of individual effort will be different. Let’s take curtailment behaviours for instance, or turning off the light when leaving a room. This action is quick to perform and does not necessitate deep thinking. A nudge, in the form of a ‘sticker’, could be a sufficient prompt to encourage the right behaviour. In fact, examples from across the world have identified nudging as a promising tool for curtailment behaviours, and to reduce energy consumption (Charlier et al., 2020).

However, nudging might not be the adequate intervention for maintenance behaviours, which require more in-depth thinking and strong motivation in order to be modified. Instead, a field experiment conducted in South Europe showed that ‘boosting’ citizens by increasing their skills and knowledge, can encourage them to undertake small maintenance work in their households, and reached specific energy reduction goals (Lazaric, Toumi, 2022).

What can we learn from behavioural economics literature?

Boosts are seen as different from nudges in terms of their sources of inspiration and their implementation. While nudges rely on the conception of Kahneman’s system 1 “which operates automatically and quickly” and is “not really educable”, boosts are inspired by the Fast and Frugal Heuristics - as defined by Gigerenzer. This theory considers, that individuals are equipped with various sets of skills, and can choose the heuristics that are most appropriate to reach their goals.

In short, when nudging, we show individuals the ‘proper’ way to behave in a particular context, but when boosting we give them the tools required to behave in a specific way. Boosts, although younger than nudges, are therefore another promising tool to generate long-term behaviour change.

In the current political and environmental context, where governments seek to encourage energy-saving behaviours, attention should be paid to design interventions that effectively target these different types of behaviours, be they maintenance or investment behaviours.

Sources:

• Allcott, H. (2011). Social norms and energy conservation. Journal of public Economics, 95(9-10), 1082-1095
• Bradt, J. (2019). Comparing the effects of behaviorally informed interventions on flood insurance demand: an experimental analysis of ‘boosts’ and ‘nudges’. Behavioural Public Policy, 1-31.
• Charlier, C., Guerassimoff, G., Kirakozian, A., & Selosse, S. (2020). Under pressure! Nudging electricity consumption within firms. Feedback from a field experiment. The Energy Journal, 42(1).
• Gigerenzer, G., Todd, P. M. et al. (1999). Simple Heuristics that make Us Smart, New York: Oxford University Press.
• Grüne-Yanoff, T., Marchionni, C., & Feufel, M. A. (2018). Toward a framework for selecting behavioural policies: How to choose between boosts and nudges.
• Economics & Philosophy, 34(2), 243-266.
• Hertwig, R., & Grüne-Yanoff, T. (2017). Nudging and boosting: Steering or empowering good decisions. Perspectives on Psychological Science, 12(6), 973-986.
• Kahneman, D. (2011). Thinking, fast and slow. London: Penguin Books.
• Lazaric, N., & Toumi, M. (2022). Reducing consumption of electricity: A field experiment in Monaco with boosts and goal setting. Ecological Economics, 191, 107231.
• Thaler, R. H., & Sunstein, C. R. (2008). Nudge: improving decisions about health. Wealth, and Happiness, Yale University Press.