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How smart are electricity users with ‘Smart Metering’? A Behavioural Economics experiment

Bager, Simon and Mundaca, Luis LU (2015) 38th International Association for Energy Economics (IAEE) International Conference In [Host publication title missing]
Abstract
The purpose of this paper is to examine how behavioural biases affect consumers’ response to energy-use information provided through smart meters (SM). We take insights from behavioural economics and carry out two real-life experiments with SMs and electricity users. The experiments were conducted in Copenhagen (Denmark) to identify and assess the potential of two economic behavioural biases, salience and loss aversion. The results of the first experiment (i.e. installation of SM without further intervention) generally aligned with electricity use reductions found in previous research, and indicate that it may be reasonable to expect a reduction in electricity use in the medium-term (weeks/months) of ~5-7% approximately. Results of the... (More)
The purpose of this paper is to examine how behavioural biases affect consumers’ response to energy-use information provided through smart meters (SM). We take insights from behavioural economics and carry out two real-life experiments with SMs and electricity users. The experiments were conducted in Copenhagen (Denmark) to identify and assess the potential of two economic behavioural biases, salience and loss aversion. The results of the first experiment (i.e. installation of SM without further intervention) generally aligned with electricity use reductions found in previous research, and indicate that it may be reasonable to expect a reduction in electricity use in the medium-term (weeks/months) of ~5-7% approximately. Results of the second experiment (i.e. introduction of SM with and without intervention) show that subjecting participants to loss aversion and salience seems to affect their behaviour toward electricity use, as the intervention group reduced their consumption roughly twice as much as the reference group. With due limitations, the results suggest that the delivery of information to energy users needs to take into account not only its pure provision, but how it is designed, framed and presented. At all events, the results and reviewed studies strongly suggest that increased energy efficiency and energy conservation need to be addressed with a mix of policies – not only information schemes or the provision of feedback alone. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Chapter in Book/Report/Conference proceeding
publication status
published
subject
keywords
Behavioural Economics, Energy Efficiency, Households, EU energy policy, Smart Meters
in
[Host publication title missing]
pages
21 pages
publisher
International Association for Energy Economics
conference name
38th International Association for Energy Economics (IAEE) International Conference
language
English
LU publication?
yes
id
37d25950-a2aa-4bfd-b9db-1c814d211b75 (old id 8832426)
alternative location
https://www.researchgate.net/publication/279183350_How_Smart_are_Electricity_Users_with_'Smart_Metering'_A_Behavioural_Economics_Experiment
date added to LUP
2016-03-03 10:21:57
date last changed
2016-04-16 09:46:25
@inproceedings{37d25950-a2aa-4bfd-b9db-1c814d211b75,
  abstract     = {The purpose of this paper is to examine how behavioural biases affect consumers’ response to energy-use information provided through smart meters (SM). We take insights from behavioural economics and carry out two real-life experiments with SMs and electricity users. The experiments were conducted in Copenhagen (Denmark) to identify and assess the potential of two economic behavioural biases, salience and loss aversion. The results of the first experiment (i.e. installation of SM without further intervention) generally aligned with electricity use reductions found in previous research, and indicate that it may be reasonable to expect a reduction in electricity use in the medium-term (weeks/months) of ~5-7% approximately. Results of the second experiment (i.e. introduction of SM with and without intervention) show that subjecting participants to loss aversion and salience seems to affect their behaviour toward electricity use, as the intervention group reduced their consumption roughly twice as much as the reference group. With due limitations, the results suggest that the delivery of information to energy users needs to take into account not only its pure provision, but how it is designed, framed and presented. At all events, the results and reviewed studies strongly suggest that increased energy efficiency and energy conservation need to be addressed with a mix of policies – not only information schemes or the provision of feedback alone.},
  author       = {Bager, Simon and Mundaca, Luis},
  booktitle    = {[Host publication title missing]},
  keyword      = {Behavioural Economics,Energy Efficiency,Households,EU energy policy,Smart Meters},
  language     = {eng},
  pages        = {21},
  publisher    = {International Association for Energy Economics},
  title        = {How smart are electricity users with ‘Smart Metering’? A Behavioural Economics experiment},
  year         = {2015},
}