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Mental accounting mechanisms in energy decision-making and behaviour

Author

Listed:
  • Ulf J. J. Hahnel

    (University of Geneva)

  • Gilles Chatelain

    (University of Geneva)

  • Beatrice Conte

    (University of Geneva)

  • Valentino Piana

    (University of Applied Sciences and Arts Western Switzerland)

  • Tobias Brosch

    (University of Geneva)

Abstract

Mental accounting refers to the fact that people create mental budgets to organize their resource use and to create linkages between specific acts of consumption and specific payments. Research on financial decision-making and consumer behaviour shows that these mechanisms can have a large impact on decisions and behaviours, deviating from normative economic principles. Here we introduce a theoretical framework illustrating how mental accounting mechanisms may influence individual decisions and behaviours driving energy consumption and carbon emissions. We demonstrate the practical relevance of mental accounting in the context of designing carbon pricing mechanisms and discuss the ethical dimensions of applying the concept to intervention design. By bridging the mental accounting literature and research in the energy domain, we aim to stimulate the study of the cognitive mechanisms underlying energy-relevant decisions and the development of novel theory-based interventions targeting reductions of energy use and carbon emissions.

Suggested Citation

  • Ulf J. J. Hahnel & Gilles Chatelain & Beatrice Conte & Valentino Piana & Tobias Brosch, 2020. "Mental accounting mechanisms in energy decision-making and behaviour," Nature Energy, Nature, vol. 5(12), pages 952-958, December.
    • Handle: RePEc:nat:natene:v:5:y:2020:i:12:d:10.1038_s41560-020-00704-6
    DOI: 10.1038/s41560-020-00704-6
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    Cited by:

    1. Liu, Xin & Huang, Tao & Qiu, Haifeng & Li, Yang & Lin, Xueshan & Shi, Jianxiong, 2024. "Optimal aggregation of a virtual power plant based on a distribution-level market with the participation of bounded rational agents," Applied Energy, Elsevier, vol. 364(C).
    2. Ana Salomé García-Muñiz & María Rosalía Vicente, 2021. "The Effects of Informational Feedback on the Energy Consumption of Online Services: Some Evidence for the European Union," Energies, MDPI, vol. 14(10), pages 1-14, May.
    3. John List & Ioannis Pragidis & Michael Price, 2024. "Toward an Understanding of the Economics of Prosumers: Evidence from a Natural Field Experiment in Energy," Natural Field Experiments 00791, The Field Experiments Website.
    4. F. Funke & L. Mattauch & T. Douenne & A. Fabre & J. E. Stiglitz, 2024. "Supporting carbon pricing when interest rates are higher," Nature Climate Change, Nature, vol. 14(7), pages 665-667, July.
    5. Yang, Yang & He, Weijun & Jiang, Ningye & Xu, Shasha & Ramsey, Thomas Stephen & Yuan, Liang, 2024. "The intertemporal choice study of individual water-saving irrigation construction under three water pricing and subsidy scenarios," Agricultural Water Management, Elsevier, vol. 295(C).
    6. Johan Warburg & Britta Frommeyer & Julia Koch & Sven‐Olaf Gerdt & Gerhard Schewe, 2021. "Voluntary carbon offsetting and consumer choices for environmentally critical products—An experimental study," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3009-3024, November.
    7. Andersson, Henrik & Ouvrard, Benjamin, 2024. "Not on my plate! Using mental accounting to promote meat substitutes," TSE Working Papers 24-1547, Toulouse School of Economics (TSE).
    8. Lagomarsino, Maria & van der Kam, Mart & Parra, David & Hahnel, Ulf J.J., 2022. "Do I need to charge right now? Tailored choice architecture design can increase preferences for electric vehicle smart charging," Energy Policy, Elsevier, vol. 162(C).
    9. Gustafsson, Peter & Nilsson, Peter & David, Lucinda & Marañon, Antonia, 2021. "Framing energy choices in consumer decision-making Evidence from a random experiment in Sweden," Papers in Innovation Studies 2021/14, Lund University, CIRCLE - Centre for Innovation Research.

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