Social Norms and Energy Conservation 09 - 014

This paper evaluates a large-scale pilot program run by a company called OPOWER, previously known as Positive Energy, to mail home energy use reports to residential utility consumers. The reports include energy conservation information as well as social comparisons between a household’s energy use and that of its neighbors. Using data from a randomized natural …eld experiment at 80,000 treatment and control households in Minnesota, I estimate that the monthly program reduces energy consumption by 1.9 to 2.0 percent relative to baseline. In a treatment arm receiving reports each quarter, the e¤ects decay over the months between letters and increase again upon receipt of the next letter. I provide evidence to suggest that at least some of this e¤ect is because consumers’attention is malleable and non-durable. I show that “pro…ling,” or using a statistical decision rule to target the program at households whose observable characteristics predict larger treatment e¤ects, could substantially improve cost e¤ectiveness in future programs. The results provide additional evidence that non-price “nudges” can substantially a¤ect consumer behavior. JEL Codes: C44, D03, L94, Q41. Keywords: Social norms, attention, energy demand, randomized …eld experiments, statistical treatment rules, pro…ling. — — — — — — — — — — — — — — — — — — — — — — — — — — — — I thank, without implicating, Ian Ayres, Bob Cialdini, Tyler Curtis, Rajeev Dehejia, Kenny Gillingham, Larry Goulder, Matt Harding, Kosuke Imai, Seema Jayachandran, Karthik Kalyanaraman, Ogi Kavazovic, Alex Laskey, Aprajit Mahajan, Sendhil Mullainathan, Dave Rapson, Todd Rogers, Eldar Sha…r, and seminar participants at Harvard, Stanford, and the Environmental Defense Fund for helpful conversations related to this project. This is a revision of a June 2009 working paper (Allcott 2009a).