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Domestic Electricity Conservation: A Behavioural Economics appraoch


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This presenatation is a summary of a BE Trial proposal to reduce domestic electricty consumption in North London, UK using a Nudge approach.

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Domestic Electricity Conservation: A Behavioural Economics appraoch

  1. 1. Electricity Conservation A Behavioural Economics ‘Nudge’ Trial presentation in support of BE101x Proposed by: Marcstephan For the Rotman School, Toronto December 2013
  2. 2. Statement of the Problem  The UK is facing a severe electricity generation and distribution crisis with ever rising demand and an old inefficient generation and distribution infrastructure.  Domestic electricity use in the UK is a large contributor to the rise in electricity consumption  Of domestic consumption between 10 and 15% is a result of electrical goods Standby Power consumption when not actually in use.   See:  The UK Government has a commitment to reducing electricity consumption and CO2 emissions and is examining cost-effective means of achieving this goal.  Household electricity bills are rising rapidly and the Government sees cost-effective means of reducing consumption as having an additional beneficial impact for stretched household budgets.
  3. 3. Project Overview  The Behavioural Economics Nudge project which this summary is outlining will take place in the Boroughs of Enfield and Barnet in North London, UK which have a combined population of approximately 600,000.  The Nudge will be a Behavioural Economics RCT Field Trial using an ANOVA statistical approach.  The trial will use a modified utility Bill (one standard and two variants) as the Independent Variable (IV), redesigned using the relevant principles of Behavioural Economics, to encourage a change in behaviour at the level of the individual household (the experimental unit).  The Nudge conditions will be: Control, ‘Light’ Nudge, ‘Heavy’ Nudge:   ‘Light’ and ‘Heavy’ refer to the level of BE influencers and Heuristics applied in that Bill Format. The Targeted Behaviour  The behaviour that the Nudge will target is:   to encourage households to reduce their electricity consumption by switching off non-essential Standby power items at the wall socket when not in use during the day and overnight. The Dependent Variable (DV) in the study will be the total electrical consumption of the household over the trial period under various conditions of the experimental design. 
  4. 4. Bill representations (IV) ‘Control’ Bill format ‘Light’ Nudge Bill format ‘Heavy’ Nudge Bill format 600 households, matched for characteristics, will be randomly selected in Enfield & Barnet, London, UK to receive one of the Bill types (Factor 1, 3 Levels) which will give 200 households per Bill type. Changes in electricity use will be monitored over 12 months and analysed to assess the impact of the Nudge Bill Formats compared to each other and the control Bill Format in terms of electricity usage.
  5. 5. Summary  The Behavioural Economics trial outlined in this presentation will:  Examine the impact of a Nudge in changing behaviour relating to electricity consumption caused by domestic Standby power units.  Identify the direction and scope of the reduction in electricity usage savings that result under the Nudge conditions  Provide a basis for a low-cost, easy and practical solution to domestic electrical energy conservation that, if viable, can be rolled-out over large areas costeffectively  Add further information to the body of evidence underpinning the science of Behavioural Economics.