IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v137y2020ics0301421519307177.html
   My bibliography  Save this article

Pro-environmental incentives and loss aversion: A field experiment on electricity saving behavior

Author

Listed:
  • Ghesla, Claus
  • Grieder, Manuel
  • Schmitz, Jan
  • Stadelmann, Marcel

Abstract

This paper reports evidence from a field experiment investigating households’ electricity saving behavior. We motivated households’ efforts to save electricity via pro-environmental incentives that did not affect people’s monetary utility but targeted their environmental preferences. The results show that such pro-environmental incentives can be effective, especially when framed as potential losses to the environment. Our loss-framed pro-environmental incentive led households to save 5% on their monthly electricity consumption compared to a control group.

Suggested Citation

  • Ghesla, Claus & Grieder, Manuel & Schmitz, Jan & Stadelmann, Marcel, 2020. "Pro-environmental incentives and loss aversion: A field experiment on electricity saving behavior," Energy Policy, Elsevier, vol. 137(C).
    • Handle: RePEc:eee:enepol:v:137:y:2020:i:c:s0301421519307177
    DOI: 10.1016/j.enpol.2019.111131
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421519307177
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2019.111131?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Goette, Lorenz & Tiefenbeck, Verena & Degen, Kathrin & Fleisch, Elgar & Tasic, Vojkan & Lalive, Rafael & Staake, Thorsten, 2016. "Overcoming Salience Bias: How Real-Time Feedback Fosters Resource Conservation," CEPR Discussion Papers 11480, C.E.P.R. Discussion Papers.
    2. Roland G. Fryer, 2011. "Financial Incentives and Student Achievement: Evidence from Randomized Trials," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(4), pages 1755-1798.
    3. Johannes Abeler & Armin Falk & Lorenz Goette & David Huffman, 2011. "Reference Points and Effort Provision," American Economic Review, American Economic Association, vol. 101(2), pages 470-492, April.
    4. Esther Duflo & William Gale & Jeffrey Liebman & Peter Orszag & Emmanuel Saez, 2006. "Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1311-1346.
    5. Olivier Armantier & Amadou Boly, 2015. "Framing Of Incentives And Effort Provision," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 917-938, August.
    6. Tanjim Hossain & John A. List, 2012. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," Management Science, INFORMS, vol. 58(12), pages 2151-2167, December.
    7. Roland Fryer & Steven Levitt & John List & Sally Sadoff, 2012. "Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment," Framed Field Experiments 00591, The Field Experiments Website.
    8. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    9. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February.
    10. Zarghamee, Homa S. & Messer, Kent D. & Fooks, Jacob R. & Schulze, William D. & Wu, Shang & Yan, Jubo, 2017. "Nudging charitable giving: Three field experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 137-149.
    11. Dora L. Costa & Matthew E. Kahn, 2013. "Energy Conservation “Nudges” And Environmentalist Ideology: Evidence From A Randomized Residential Electricity Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 680-702, June.
    12. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
    13. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    14. Bruffaerts, Christopher & Verardi, Vincenzo & Vermandele, Catherine, 2014. "A generalized boxplot for skewed and heavy-tailed distributions," Statistics & Probability Letters, Elsevier, vol. 95(C), pages 110-117.
    15. Karlan, Dean & List, John A. & Shafir, Eldar, 2011. "Small matches and charitable giving: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5), pages 344-350.
    16. Sebastian Kube & Michel Andre Marechal & Clemens Puppe, 2012. "The Currency of Reciprocity: Gift Exchange in the Workplace," American Economic Review, American Economic Association, vol. 102(4), pages 1644-1662, June.
    17. John Beshears & Katherine L. Milkman & Joshua Schwartzstein, 2016. "Beyond Beta-Delta: The Emerging Economics of Personal Plans," American Economic Review, American Economic Association, vol. 106(5), pages 430-434, May.
    18. Rachel Croson & Nicolas Treich, 2014. "Behavioral Environmental Economics: Promises and Challenges," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(3), pages 335-351, July.
    19. Stephan Meier, 2007. "Do Subsidies Increase Charitable Giving in the Long Run? Matching Donations in a Field Experiment," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1203-1222, December.
    20. Reichhuber, Anke & Camacho, Eva & Requate, Till, 2009. "A framed field experiment on collective enforcement mechanisms with Ethiopian farmers," Environment and Development Economics, Cambridge University Press, vol. 14(5), pages 641-663, October.
    21. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    22. Andor, Mark A. & Gerster, Andreas & Peters, Jörg & Schmidt, Christoph M., 2020. "Social Norms and Energy Conservation Beyond the US," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    23. Bruce Shearer, 2004. "Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 513-534.
    24. Ernst Fehr & Lorenz Goette, 2007. "Do Workers Work More if Wages Are High? Evidence from a Randomized Field Experiment," American Economic Review, American Economic Association, vol. 97(1), pages 298-317, March.
    25. John A. List & Michael K. Price, 2016. "Editor's Choice The Use of Field Experiments in Environmental and Resource Economics," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(2), pages 206-225.
    26. Martin Kesternich & Christiane Reif & Dirk Rübbelke, 2017. "Recent Trends in Behavioral Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 403-411, July.
    27. Levin, Irwin P. & Schneider, Sandra L. & Gaeth, Gary J., 1998. "All Frames Are Not Created Equal: A Typology and Critical Analysis of Framing Effects," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 149-188, November.
    28. Avineri, Erel & Owen D. Waygood, E., 2013. "Applying valence framing to enhance the effect of information on transport-related carbon dioxide emissions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 48(C), pages 31-38.
    29. Jonathan de Quidt, 2017. "Your Loss is my Gain: A Recruitment Experiment with Framed Incentives," CESifo Working Paper Series 6326, CESifo Group Munich.
    30. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1082-1095, October.
    31. Alec Brandon & John A. List & Robert D. Metcalfe & Michael K. Price & Florian Rundhammer, 2019. "Testing for crowd out in social nudges: Evidence from a natural field experiment in the market for electricity," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 116(12), pages 5293-5298, March.
    32. Noah J. Goldstein & Robert B. Cialdini & Vladas Griskevicius, 2008. "A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(3), pages 472-482, March.
    33. Dean Karlan & Margaret McConnell & Sendhil Mullainathan & Jonathan Zinman, 2016. "Getting to the Top of Mind: How Reminders Increase Saving," Management Science, INFORMS, vol. 62(12), pages 3393-3411, December.
    34. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    35. Chen, Victor L. & Delmas, Magali A. & Locke, Stephen L. & Singh, Amarjeet, 2017. "Information strategies for energy conservation: A field experiment in India," Energy Economics, Elsevier, vol. 68(C), pages 215-227.
    36. Liebe, Ulf & Gewinner, Jennifer & Diekmann, Andreas, 2018. "What is missing in research on non-monetary incentives in the household energy sector?," Energy Policy, Elsevier, vol. 123(C), pages 180-183.
    37. Judith I.M. De Groot & Wokje Abrahamse & Kayleigh Jones, 2013. "Persuasive Normative Messages: The Influence of Injunctive and Personal Norms on Using Free Plastic Bags," Sustainability, MDPI, vol. 5(5), pages 1-16, April.
    38. Judith Scott-Clayton, 2011. "On Money and Motivation: A Quasi-Experimental Analysis of Financial Incentives for College Achievement," Journal of Human Resources, University of Wisconsin Press, vol. 46(3), pages 614-646.
    39. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    40. Hunt Allcott & Todd Rogers, 2014. "The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation," American Economic Review, American Economic Association, vol. 104(10), pages 3003-3037, October.
    41. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9), pages 1082-1095.
    42. Andor, Mark A. & Fels, Katja M., 2018. "Behavioral Economics and Energy Conservation – A Systematic Review of Non-price Interventions and Their Causal Effects," Ecological Economics, Elsevier, vol. 148(C), pages 178-210.
    43. Felder, Stefan & Schleiniger, Reto, 2002. "Environmental tax reform: efficiency and political feasibility," Ecological Economics, Elsevier, vol. 42(1-2), pages 107-116, August.
    44. Stefan Felder & Reto Schleiniger, "undated". "Environmental Tax Reform: Efficiency and Political Feasibility," IEW - Working Papers 013, Institute for Empirical Research in Economics - University of Zurich.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wentao Si & Chen Jiang & Lin Meng, 2022. "The Relationship between Environmental Awareness, Habitat Quality, and Community Residents’ Pro-Environmental Behavior—Mediated Effects Model Analysis Based on Social Capital," IJERPH, MDPI, vol. 19(20), pages 1-20, October.
    2. Bonan, Jacopo & Cattaneo, Cristina & d’Adda, Giovanna & Tavoni, Massimo, 2021. "Can social information programs be more effective? The role of environmental identity for energy conservation," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    3. He, Shutong & Blasch, Julia & Robinson, Peter John & van Beukering, Pieter, 2024. "Social comparison feedback in decision-making context: Environmental externality levels and psychological traits matter," Ecological Economics, Elsevier, vol. 216(C).
    4. Hauser, David & Bregulla, Daniel, 2024. "Saving the world voluntarily: Experimental evidence of gain-loss framing on voluntary pro-environmental behavior," Ecological Economics, Elsevier, vol. 226(C).
    5. Buckley, P. & Roussillon, B. & Teyssier, S., 2021. "Gain and loss framing to encourage effort provision: An experiment," Working Papers 2021-02, Grenoble Applied Economics Laboratory (GAEL).
    6. Lange, Florian & Van Asbroeck, Ranja & Van Baelen, Dimitri & Dewitte, Siegfried, 2024. "For cash, the planet, or for both: Evaluating an informational intervention for energy consumption reduction," Energy Policy, Elsevier, vol. 194(C).
    7. Broberg, Thomas & Daniel, Aemiro Melkamu & Persson, Lars, 2021. "Household preferences for load restrictions: Is there an effect of pro-environmental framing?," Energy Economics, Elsevier, vol. 97(C).
    8. Rotem Dvir, 2024. "Nudging citizens co-production: Assessing multiple behavioral strategies," Policy Sciences, Springer;Society of Policy Sciences, vol. 57(4), pages 719-743, December.
    9. Pratik Mochi & Kartik Pandya & Joao Soares & Zita Vale, 2023. "Optimizing Power Exchange Cost Considering Behavioral Intervention in Local Energy Community," Mathematics, MDPI, vol. 11(10), pages 1-15, May.
    10. Leonhard K. Lades & Ewa Zawojska & Robert J. Johnston & Nick Hanley & Liam Delaney & Mikołaj Czajkowski, 2022. "Anomalies or Expected Behaviors? Understanding Stated Preferences and Welfare Implications in Light of Contemporary Behavioral Theory," Working Papers 2022-20, Faculty of Economic Sciences, University of Warsaw.
    11. Lingyun Mi & Jiali Han & Ting Xu & Xuejiao Wang & Lijie Qiao & Tianwen Jia & Xiaoli Gan, 2023. "Evaluating Whether and How Public Health Event Information Frameworks Promote Pro-Environmental Behavior," IJERPH, MDPI, vol. 20(4), pages 1-20, February.
    12. Shi-Yi Song & Hong Leng, 2020. "Modeling the Household Electricity Usage Behavior and Energy-Saving Management in Severely Cold Regions," Energies, MDPI, vol. 13(21), pages 1-22, October.
    13. Essl, Andrea & Hauser, David & von Bieberstein, Frauke, 2024. "Let's think about the future: The effect of positive and negative future primes on pro-environmental behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 109(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brülisauer, Marcel & Goette, Lorenz & Jiang, Zhengyi & Schmitz, Jan & Schubert, Renate, 2020. "Appliance-specific feedback and social comparisons: Evidence from a field experiment on energy conservation," Energy Policy, Elsevier, vol. 145(C).
    2. d'Adda, Giovanna & Galliera, Arianna & Tavoni, Massimo, 2020. "Urgency and engagement: Empirical evidence from a large-scale intervention on energy use awareness," Journal of Economic Psychology, Elsevier, vol. 81(C).
    3. Joseph,George & Ayling,Sophie Charlotte Emi & Miquel-Florensa,Pepita & Bejarano,Hernán D. & Cardona,Alejandra Quevedo, 2021. "Behavioral Insights in Infrastructure Sectors : A Survey," Policy Research Working Paper Series 9704, The World Bank.
    4. Beshears, John & Kosowsky, Harry, 2020. "Nudging: Progress to date and future directions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 161(S), pages 3-19.
    5. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    6. Harding, Matthew & Hsiaw, Alice, 2014. "Goal setting and energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 209-227.
    7. Peters, Jörg & Langbein, Jörg & Roberts, Gareth, 2016. "Policy evaluation, randomized controlled trials, and external validity—A systematic review," Economics Letters, Elsevier, vol. 147(C), pages 51-54.
    8. Andor, Mark A. & Gerster, Andreas & Peters, Jörg, 2022. "Information campaigns for residential energy conservation," European Economic Review, Elsevier, vol. 144(C).
    9. Jonathan de Quidt, 2018. "Your Loss Is My Gain: A Recruitment Experiment with Framed Incentives," Journal of the European Economic Association, European Economic Association, vol. 16(2), pages 522-559.
    10. Brick, Kerri & De Martino, Samantha & Visser, Martine, 2023. "Behavioural nudges for water conservation in unequal settings: Experimental evidence from Cape Town," Journal of Environmental Economics and Management, Elsevier, vol. 121(C).
    11. Sabrina Eisenbarth & Louis Graham & Anouk S. Rigterink, 2021. "Can Reminders of Rules Induce Compliance? Experimental Evidence from a Common Pool Resource Setting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(4), pages 653-681, August.
    12. Brice Corgnet & Roberto Hernán-González, 2019. "Revisiting the Trade-off Between Risk and Incentives: The Shocking Effect of Random Shocks?," Management Science, INFORMS, vol. 65(3), pages 1096-1114, March.
    13. Mahmoodi, Jasmin & Prasanna, Ashreeta & Hille, Stefanie & Patel, Martin K. & Brosch, Tobias, 2018. "Combining “carrot and stick” to incentivize sustainability in households," Energy Policy, Elsevier, vol. 123(C), pages 31-40.
    14. John A. List & James J. Murphy & Michael K. Price & Alexander G. James, 2019. "Do Appeals to Donor Benefits Raise More Money than Appeals to Recipient Benefits? Evidence from a Natural Field Experiment with Pick.Click.Give," NBER Working Papers 26559, National Bureau of Economic Research, Inc.
    15. K. Hilken & S. Rosenkranz & K.J.M. De Jaegher & M. Jegers, 2013. "Reference Points, Performance and Ability: A Real Effort Experiment on Framed Incentive Schemes," Working Papers 13-15, Utrecht School of Economics.
    16. Spandagos, Constantine & Baark, Erik & Ng, Tze Ling & Yarime, Masaru, 2021. "Social influence and economic intervention policies to save energy at home: Critical questions for the new decade and evidence from air-condition use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    17. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    18. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    19. Andor, Mark A. & Gerster, Andreas & Peters, Jörg & Schmidt, Christoph M., 2020. "Social Norms and Energy Conservation Beyond the US," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    20. Takanori Ida, Kayo Murakami, and Makoto Tanaka, 2016. "Electricity demand response in Japan: Experimental evidence from a residential photovoltaic power-generation system," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).

    More about this item

    Keywords

    Pro-environmental behavior; Ecological incentives; Loss aversion; Loss framing; Randomized field experiments; Energy conservation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:137:y:2020:i:c:s0301421519307177. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.