Energy efficiency and behavioural insights

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: 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.

Project Lead:
Anna Pegels

Project Team:
Aurelia Figueroa
Babette Never

Financing:
Federal Ministry for Economic Cooperation and Development

Time Frame:
2013 - 2014 / completed

Project description

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.

Publications

Events

Project Coordination

Sonja Packschies

Co-operation Partner

Current Publications

When and how can foreign aid slow migration?

Martin-Shields, Charles / Steffen Angenendt / Benjamin Schraven
Externe Publikationen of 14 December 2017

Die ökonomischen Auswirkungen von EU-Freihandelsabkommen auf Entwicklungsländer

Brandi, Clara
Externe Publikationen of 14 December 2017