How Behavioural Science Can Drive Energy Efficiency

Persuading people to use energy more efficiently has long been considered an effective way to help tackle climate change. But as we know, persuading people to do anything is easier said than done. 

Historically, policies and campaigns encouraging people to reduce their energy consumption have relied too heavily on neoclassical economics or market research. The problem with the neoclassical approach is that it assumes the allure of cost savings will be sufficient enough to persuade. On the other hand, taking market research too literally often negates the 'say-do gap' in which people say one thing when surveyed but do the opposite in reality. 

The role of behavioural science 

So, you're probably wondering, which approach should we take? Well, there's no silver bullet— there rarely ever is — but we firmly believe behavioural science has a role to play, and we reckon Nobel Laureate and author of Nudge, Richard Thaler, might just agree with us.  

You see, there's a common concept in behavioural science referred to as 'nudging', which essentially means to steer someone's behaviour positively and predictably. In the context of utilities, nudges can be used to encourage more energy-conscious behaviour, through the use of smart meters, home energy reports or comparisons with community or similar households, for example. 

Normalising new behaviours 

Through behavioural science, we also have the power to normalise new behaviours. Consider the case of whoever coined the term 'staycation'. They essentially leveraged the framing effect (a behavioural science technique) to destigmatise local holidays, doing a huge favour for both cash-strapped Brits and local economies. 

And there are many impactful ways in which utility companies can - and have - tapped into the power of behavioural science. A good example is that of the World Bank project in Costa Rica. To tackle water shortages, they leveraged social norms, attaching stickers to water bills, allowing households to compare their water bills with their neighbours' quite easily. Those who received a stickered bill reduced their consumption by up to 5.6%. 

Case studies in behavioural science 

Another example (that's quite literally much closer to home) is our campaign to drive a water-efficient culture amongst Southern Water customers. Our behavioural-science-informed campaign was built on three core pillars: 

• Building awareness of water scarcity and the need to use water wisely. 

• Establishing an efficiency culture as the norm. 

• Celebrating and encouraging behaviour change. 

Interested in the full case study? Have a read of it here. 

The two examples given above are illustrative of the two categories that behaviour-based campaigns within the utilities sector tend to fall into: (1) education and outreach to increase knowledge amongst the target audience and (2) feedback interventions that provide customers with frames of reference. 

The power of direct feedback 

Feedback (and in particular, direct feedback) is an incredibly powerful weapon within the behavioural science arsenal – especially when combined with goal setting. Virgin Atlantic demonstrated this by designing feedback-based nudges encouraging their pilots to use less fuel. 

Fuel is the largest single cost item for an airline, not to mention a major contributor to carbon emissions, so any reduction would benefit the company's bottom line and the planet. After working with behavioural economists from the University of Chicago and testing a range of different 'nudge' combinations, they found that providing pilots with tailored feedback on their individual fuel consumption relative to colleagues and setting efficiency goals had the greatest impact on fuel consumption, improving efficiency measures by 9%, from 11% to 20%. Over the 8-month test period, carbon emissions were reduced by 21,500 tonnes of CO2 (which is equivalent to an Airbus A330 flying 170 times from London to New York!) 

Similarly, research by the University of California’s Center for Environmental Research (CERT) found that presenting drivers with real-time behavioural feedback about their fuel economy can reduce fuel consumption by 6% on average. As a result, this insight is being incorporated into the dashboard design of many vehicles, with manufacturers from Ford to BMW attempting to leverage personalised feedback into more fuel-efficient driving. 

Smart meters and behaviour change 

The rollout of smart meters in the UK acts as a major enabler for utility companies to provide direct feedback to customers, helping them learn how their actions around the home are associated with energy use. Additionally, the more accurate billing they provide helps 'close the reward loop' between customers’ actions and the incentive they see through their bills and, according to The Behavioural Insights Team, smart meters are already positively impacting household behaviour. 

A quick recap 

Some of the behavioural science techniques and concepts that we've touched on in this blog include:  

Nudges - A nudge is any small adjustment in environment or communications that attracts our attention and alters our behaviour. It can be applied to help people make better choices for themselves without restricting their freedom of choice. 

Social norms – We have a tendency to adopt opinions and follow the behaviours of the majority to feel safer, avoid conflict, or simply be more cognitively efficient in our decision-making. Utility companies can leverage social norms to encourage people to change to a preferred behaviour by highlighting an in-group behaviour. 

Framing – Our decisions and preferences are affected by how information is presented. How something is framed can make different features more or less prominent and alter decision-making and behaviour. This is true even if the information remains the same. This is a key way in which a small change in communications can have a disproportionate impact on behaviour. 

Behavioural feedback – Making it personal and giving people detailed and accurate information about their own behaviour can be very motivating to actively improve undesired behaviours.  

Goal setting – Efficiency goals are a key way to encourage new behaviours over the long term. Goal setting can be particularly useful for influencing habitual behaviours (such as driving) that are notoriously difficult to change because we're not always actively thinking about them. 

Say-do gap – The say-do gap exists when people intend to act in a certain way, but for some reason or another, do not. This is a key issue for sustainability-led campaigns where people generally agree with the well-intentioned initiative and intend to adjust their behaviour accordingly but never actually make a change. 

Saving the planet nudge by nudge 

In conclusion, behavioural science can provide a set of scientific concepts and frameworks for utility companies attempting to promote more sustainable practices amongst their customers. 

Where previous campaigns may have failed to be effective in light of our human irrationalities and lack of action, behavioural science-led interventions are designed to overcome our irrational behaviour and promote real changes. The examples given in this blog also show how small and inexpensive actions can make a big difference.  

Planning a behavioural science-led campaign? Just want a sounding board for some of your concepts? Our strategists and planners love to chat about everything nudge-related.