Neoclassical economics has shaped our understanding of human behaviour for several decades. In real life, however, humans are not always as rational and utility-maximising as homo economicus. In contrast, they act irrationally and contradictorily: they have biases for the familiar and things they already own, holding on to them even in cases of economic loss; they prefer a limited number of choices over many; and they procrastinate even when immediate action would be beneficial. In contrast to purely seeking to serve their self-interest, they can be motivated by altruism, fairness, and commitment, or by competing with others.

These principles of behavioural economics matter for energy efficiency programme design because they are often the root causes of non-technical barriers to energy efficiency uptake.People prefer things they already own and they want to stick with their habits, even if this means wasting energy and money. Incorporating the insights of behavioural economics into energy efficiency programmes may help to motivate people to overcome this inertia. Taking efficient appliances as an example, a deployment programme may

• Provide information about available products, but limit the number of choices so as to avoid choice overload,

• Ensure new products deliver similar services as familiar ones (e.g. same light colour), and

• Shift gains to the near-term and costs to the future (e.g. by designing financing schemes).

In the research project 'Energy efficiency and behavioural economics' we aim to use such insights such insights on human behaviour to improve the design of energy efficiency programmes in developing countries.