Success, Failure, and Information: How Households Respond to Energy Conservation Goals

Abstract

This paper investigates how households respond to repeated energy conservation goals. I track households’ program participation and electricity use decisions across successive annual energy conservation challenges offered by a large electrical utility company. I find that households’ decisions whether to re-enroll in the program and attempt a subsequent goal are highly sensitive to their success or failure in achieving their energy conservation goal but not to the financial incentive to continue participating or to their level of past effort. This suggests that households are either responding to the emotional and normative aspects of success and failure or are substantially inattentive to information that is provided directly to them. I also find that households’ electricity use reduces each year they participate yet rebounds when they stop participating.