Monday, April 26, 2010

Nudges gone wrong: A program designed to reduce energy consumption persuaded some Republicans to consume more

OPOWER electricity utilization report.

By Ray Fisman
Posted Friday, April 23, 2010, at 10:01 AM ET

It's a sad statistical reality: Half of us are below average. But that doesn't stop most of us from clinging to delusions of superiority: We like to believe we're better-looking, smarter, funnier, and more honest than those around us. Now and then, when presented with evidence of our shortcomings, we set to work catching up with—and getting ahead of—the Joneses. A decade ago, I caved in and bought a cell phone when I read that the median American owned one.

Psychologists and behavioral economists hope that our tendency to benchmark our own achievements using the performance of others might provide a way to encourage Americans to become better citizens. Can the fear of being below average persuade us to reduce our electricity consumption, increase our charitable contributions, and otherwise compete to be better citizens?

One problem with this approach is that we all define "better" differently, as a new study emphasizes. UCLA economists Dora Costa and Matthew Kahn analyzed the impact of an energy-conservation program in California that informed households about how their energy use compared with that of their neighbors. While the program succeeded in encouraging Democrats and environmentalists to lower their consumption, Republicans had the opposite reaction. When told of their relative thrift, they started cranking up the thermostat and leaving the lights on more often. …

Why would some energy-conscious Republicans all of a sudden become power hogs? One explanation is that many conservatives don't believe that burning energy harms the planet, so when they learn that they're better than average, they become less vigilant about turning the lights off. That is, they're simply moving closer to what they now know is the norm (what psychologists call the boomerang effect). Costa and Kahn also look for guidance from the patron saint of right-wing fundamentalists, Rush Limbaugh, who encouraged his listeners to turn on all their lights during Earth Hour. Costa and Kahn suggest that ardently right-wing electricity customers might respond to paternalistic nudges by burning more energy, just to thumb their noses at Big Brother. …

Nudges Gone Wrong

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