by Matej Hodek, Hyojoo Kim, Douglas Miller (C’12) & Antonia Weitzer
Despite widespread political support for measures promoting investments in energy efficiency in the residential sector, there remains vast, unmet potential. In order to better understand the reasoning behind meager investments in energy efficiency, a study was conducted by four graduate students at Imperial College London – including one former member of the IGEL team – to investigate the role of financial and non-financial factors affecting household decisions to invest in energy efficiency.
Through a survey and choice experiment of US and UK participants, a model was developed which shows the factors affecting energy efficiency investment decisions. While it was found that the usual suspects of payback period and upfront costs play a significant role in these decisions, it was also found that non-financial factors such as hassle, carbon dioxide savings, and social norms are also crucial. Policies aimed at encouraging household investments in energy efficiency must therefore incorporate both financial and non-financial issues.
The authors also offer several policy proposals based on the findings of the survey and choice experiment, such as a Conserve More Tomorrow plan (based on the much acclaimed Save More Tomorrow plan), one-step energy efficiency packages, norm-changing events and processes, clearer and more meaningful communication of environmental messages, and incorporating the shadow costs of status quo energy choices into prices.