How firms can use psychology to create successful energy conservation interventions: A literature review

Abstract

Any solution to rising levels of CO2 in the atmosphere critically depends on decreasing levels of energy consumption and increasing sustainable small-scale energy production in households. These may be achieved in two major ways: by changing people’s behaviour and by the adoption of technology. In the fields of psychology, decision-making and behavioural economics, many factors have been identified that can influence whether such changes occur. Off4firms is an innovative project that aims at reducing greenhouse gas emissions and energy consumption of private households through interventions by firms. With these interventions, firms try to reduce the use of energy in the private households of their employees. The first aim of this working paper is to give an overview of relevant factors and specify how they relate to energy conservation efforts. We describe the most important findings concerning psychological variables that play a role in energy conservation decisions and energy behaviour. We give an overview of this large literature, and describe six broad categories of variables: 1. The problematic psychological effects of economic incentives 2. Effects of uncertainty and lack of knowledge 3. Effects of temporal trade-offs 4. Effects of the social environment 5. Individual trait measures 6. Demographics. The second aim of this working paper is to argue that a firm-based approach is ideal for countering the negative effects and making optimal use of positive effects of these factors for stimulating energy conservation in employees’ households. For every category of psychological factors we therefore discuss how these may be exploited by firms to minimize their negative effects and emphasize their positive effects. We conclude that firms offer a suitable environment in which to implement such measures, since many of these variables can be exploited to the benefit of energy conservation programs for households.