Building a Green Consumer

Read the full story in the Wall Street Journal.

When it comes to saving energy, people aren’t irrational. They just seem that way sometimes.

Policy makers and executives sometimes think that if they just make it cost-effective for people to save energy, it will happen. But it hasn’t — at least not in a big enough way. Households and businesses remain far less energy-efficient than they would be if their decisions followed standard economic principles.

So why aren’t more people making those investments?

Behavioral-science research shows that there are good reasons for what energy consumers do and don’t do. Sometimes it is hard to find reliable information about an energy-saving alternative or its provider, or the process of switching is too complicated, or people aren’t convinced that something new will work as well and be as reliable as what they have.

Most efforts to get people to take the big steps to save energy have failed because they haven’t taken these factors into account. The key to changing behavior lies not in the size of financial incentives, but in understanding what else stands in the way of change.

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