Behavior Research

Paying for Good Deeds: Using Financial Incentives to Achieve Energy Efficiency

Matthew Harding (PI)

The aim of this project is to understand how we can motivate individuals to achieve sustainable long run energy efficiency. In particular it asks whether we should pay individuals for achieving energy efficiency targets. Household energy use depends on the complex interaction between the available technology (such as the installed appliances), the individual behavioral constraints (such as the discount rate of future events) and economic factors (such as the price of electricity). While recent advances in technology have made it feasible to provide households with feedback and feedback on real time usage and pricing, very little is know about how to engage households in the long run. Existing evidence appears to show that households fail to engage with the existing feedback technology on a continuous basis in order to save energy in the long run. This project takes a behaviorally driven, economic approach to this problem, by considering the optimal design of rewards schemes aimed to encourage long run compliance with energy efficiency schemes. We propose a series of large-scale randomized field trials in order to measure the precise effect of such schemes and provide a quantitative guide to policy and real world implementation.

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Final Report: Paying for Good Deeds: Using Financial Incentives to Achieve Energy Efficiency (198KB PDF)
Matthew Harding

Project Abstract: Paying for Good Deeds: Using Financial Incentives to Achieve Energy Efficiency (2.6MB PDF)
Matthew Harding

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