Who we are Professor Uwe Dullec k Professor Rebeka h - - PowerPoint PPT Presentation

Pro fe sso r Uwe Dulle c k & Pro fe sso r Re b e ka h Russe ll-Be nne tt

Hug, Nudge , Shove or Smac k?

T e sting appro ac he s to e nabling c o nsume r e ne rg y use be havio ur c hang e :

Polic y

Funde d by

Who we are

Professor Uwe Dullec k

Be ha vio ura l E c o no mic s Pro fe sso r o f E c o no mic s, Q UT Q ld Be ha vio ura l E c o no mic s G ro up (Q uBE ) Ho n. Pro fe sso r o f Be ha vio ura l E c o no mic s, Cra wfo rd Sc ho o l o f Pub lic Po lic y ANU

Professor Rebeka h Russell-Bennett

So c ia l Ma rke ting a nd Co nsume r Psyc ho lo g y Pro fe sso r o f Ma rke ting Q UT Busine ss Sc ho o l Adjunc t Pro fe sso r, Na tio na l U niv e rsity o f Ire la nd, G a lwa y Ste e ring Co mmitte e Me mb e r, G E E R

Ag e nda a nd Pur pose of the Se ssion

 9.30-9.50a m: Intro duc tio ns  9.50-10.30a m: Ba c kg ro und to the Pro je c t  10.30-11.30a m: Inte ra c tive Disc ussio n  T

he se ssio n o n me tho d o c c urs in the afte rno o n, fo r tho se who have RS VP’ d to atte nd.

Introduc tions

Who is in the ro o m? Wha t is yo ur inte re st in to da y’ s se ssio n?

Bac kground to the Proje c t

“It ha s b e e n sa id tha t ma n is a ra tio na l a nima l. All my life I ha ve b e e n se a rc hing fo r e vide nc e whic h c o uld suppo rt this.”

• Be rtra nd Russe ll

E le c tric ity pric ing a nd c o nsume rs

 E

le c tri c i ty pri c e s are i nc re asi ng

 T

he re i s i nc re ase d pre ssure o n c o nsum e rs

 We c an e i

the r i nflue nc e the de m and

• r the supply si

de

So ur c e : Da ta fr

• m ABS, G r

a p h fr

• m ACCC: Re ta il E

le c tr ic ity Pr ic ing Inquir y – Pre liminar y Re p o r t, 22 Se p te mbe r 2017

Co nsume r Ele c tric ity Pric e Inde x, Infla tio n Adjuste d

Ho w to influe nc e the de ma nd side whe n e le c tric ity is invisible to c o nsume rs?

There is evidence that much electricity consumption takes place without ut a any c cons nscious us consid ideration of consumers usage (Thøgersen & Grønhøj, 2010; Pierce, Schiano, & Paulos, 2010). Electricity is ‘abstr tract, t, invisible a and u untouchable’ (Darby, 2006) It is bound up with routine ne a and h d habi bit (Shove, 2003). It is considered a low- involvem emen ent product (Wong & Sheth, 1985).

Co nsume r Ha b its & De c isio n-ma king – Ba c kg ro und L ite ra ture

 Social M

al Mar arketing (Kolter & Zaltman, 1971: design, implementation, and control of programs calc lculat lated t to i

• influ

luence t the acceptab abil ilit ity o

• f s

soc

• cial i

al ideas as and involve considerations of product planning, pricing, communication, distribution, and marketing research.

 Behav

aviou ioural E al Econom

• mic

ics (Thaler and Sunstein, 2009): studies effects of psychological, social, cognitive, and emotional factors on economic decisions, provides important insights into how people make choices. Contrasts this with normative insights from economics.

 Public

lic P Pol

• lic

icy (Hertier & Lehmkuhl, 2008): Hierarchical: “Legislative decisions and executive decisions that steer democratic governmental action at the national level… legislators can threaten to enact adverse legislation unless potentially affected actors alter t their ir b behav aviou

• ur t

to ac

• accom
• mmod
• dat

ate t the legis islat lator

• rs d

deman ands”.

Public Polic y Soc ia l Ma rketing Beha vioura l E c onomic s

Be ha vio ura l E c o no mic s: I nsig hts a nd L imita tio ns

 De fa ults a nd E

ffic ie nc y

E ffic ie nt (CF L B) bulbs are ke pt 80% o f the time whe n the y are installe d as the d e fault, w he re as trad itio nal I L B (inc and e sc e nt) bulbs are ke pt 56% o f the time (Dinne r e t al., 2011) – U S stud y.

“De fa ult is a n implic it e ndorse me nt”

(Sunste i n, 2016; Madri an & She a, 2001; Mc K e nzi e e t al, 2006).

Be ha vio ura l E c o no mic s: I nsig hts a nd L imita tio ns

 Smar

t Meter s

E U ta rg e t o f 80% o f ho me s with sma rt me te rs (dire c tive 2009/ 72/ E C).

 Oe la nd e r a nd T

ho rg e rso n (2013) sho w o p t

• ut fra me le a d s to a 50% highe r

uptake in

sma rt me te rs tha n info rma tio n a lo ne .

 Sunste in (2016), Jo hnso n a nd Go ld ste in, se e

ine rtia o r p ro c ra stina tio n a s a ma jo r re a so n.

Be ha vio ura l E c o no mic s: Insig hts a nd L imita tio ns – Hug s & Sma c ks

 L

• ss ave r

sion

Ge rma n d a ta (Infa s Ene rg ie mo nito r, 2012) sho ws ta riff switc he s a re ra re – e ve n if the a lte rna tive is “ g re e n a nd c he a p e r”.

 Ho w a pric e is pre se nte d matte rs – T

hale r e t

• al. (1994), Mc G raw e t al. (2010).

 Bro w n e t al. (2013) – pe o ple g o w ith the

d e fault unle ss it make s the m to o c o ld , pay to o muc h.

T he E thic s o f E ne rg y Nudg e s

 Sunste in (2016):

 We lfa re , ne t-b e ne fits: Gre e n

De fa ults vs. “ b e ne fits, a s jud g e d b y the mse lve s”

 Dig nity/ Auto no my: Ac tive Cho ic e .  Se lf g o ve rnme nt – trusting

institutio ns: Eva lua te d so lutio ns a s d e fa ults.

So c ia l ma rke ting a ssumptio ns

Temporal orientation

Consumers are more motivated by short-term, self-oriented options than long-term and altruistic

Pleasure principle

Consumers act to minimise pain and maximise pleasure

Social orientation

Individuals do not act alone - homo sociologicus

Knowledge-action gap

More education does not equal more action Consumer empowerment Consumers need to feel in control Value-orientation Consumers make choices that deliver them value- their definition of value not ours Segmentation Consumer choice goals and choice processes differ by household and by individual

How do c onsume rs re spond to diffe re nt polic y and industry approac he s?

E le c tric ity usa g e is a so c ia l dile mma ?

 A ‘public good’ social d

dilem emma ma is where an individual must decide whether to contribute to a common resource (Dawes, 1980).

 Individual choices generally are made based on intuitive

and implicit judgments concerning short-ter erm a m and l long- term b m ben enef efits, and the many competitive options available (Rothschild, 2001).

 Prosocial P

Personalities influence behaviour (McDougall, 1908). Pros

• soc
• cial P

Prop

• pensity, refers to the individuals

predisposition to engage with prosocial behaviour. The C Consumer m mus ust d decide; W Will I I r redu duce m my o

• wn c

consumption, i inc ncurring a a person

• nal c

cost, t to c con

• ntribute t

to a

• a c

com

• mmon r

resou

• urce (

(Dawes, 1 1980). ).

Que stio n: what do yo u think? What do c o nsum e rs think?

Hug , Nudg e , Sma c k, o r Sho ve

Ac tive De c ision Consc ious/ Conside r e d

Inc e nti ve re wa rd

Hug (so c ia l ma rke ting )

E g . Po sitiv e re wa rd fo r re duc e d c o nsumptio n a nd me e ting ta rg e t

Sma c k (pub lic po lic y)

E g . F ining fo r

• v e rc o nsumptio n

Disinc e ntiv e Punishme nt

Nudg e (b e ha vio ura l

e c o no mic s) E g . Inc re a sing the pric e s b e yo nd a c e rta in c o nsumptio n po int

Shove (pub lic po lic y)

E g . Po lic ie s re stric ting whe re a nd ho w o ne c a n c o nsume the g o o d

Automa tic / unc onsc ious Pa ssive De c ision

So urc e: F renc h, 2011

Ove r vie w o f Re sults fro m Prio r Study

T he lo ng -te rm e ffe c ti ve ne ss o f the sho ve appro ac h T he sho rt-te rm e ffe c ti ve ne ss o f the hug appro ac h T he i ne ffe c ti ve ne ss o f the nudg e and sm ac k T he m o de rati ng e ffe c ts o f pro - so c i al pro pe nsi ty i n e le c tri c i ty c o nsum pti

• n.

Male s and fe m ale s re spo nd di ffe re ntly to i nte rve nti

• n

appro ac he s.

Pra c tic a l Implic a tions: Polic y Development in the Pro- E nvironmenta l Spa c e

• Nanny State vs

Fre e C ho ic e

• De laying the

Saturatio n Po int

• Se g m e ntatio n

So urc e : O rr, Russe ll

• Be nne tt & Dulle c k, 2017

E xpe rime nta l Da ta (Orr e t a l, 2016): Be ha viour c ha ng e for e le c tric ity c onsumption.

1 2 3 4 5 6 7 8

A V ERA G E C O N TRIBUTIO NS- DEC A Y EFFEC T ( RO UN DS 1 - 1 6 )

Base line Hug Nudg e Sho ve Smac k

Ke y Points

• T

he sho ve wa s the mo st e ffe c tive a ppro a c h (c a ve a t – le ve l c ho se n; po litic a l b a c kla sh).

• T

he hug pro vide d te mpo ra ry b e ha vio ur c ha ng e in re duc ing e le c tric ity c o nsumptio n.

• T

he nudg e a nd sma c k we re no t e ffe c tive a ppro a c he s to a c hie ving re duc e d e le c tric ity c o nsumptio n.

T he da ta sa ys:

• O the r

O r ie ntate d Empathy mo de r ate s c o ntr ibutio ns to the public g o o d

• He lpfulne ss mo de r

ate s c o ntr ibutio n to the public g o o d

• Po st-Ho c te sting r

e ve ale d sig nific ant var ianc e be twe e n the sho ve and hug in lo w o the r

• o r

ie ntate d e mpathy individuals.

• Po st-Ho c te sting r

e ve ale d sig nific ant var ianc e be twe e n the sho ve and hug in lo w he lpfulne ss individuals.

Wha t this me a ns…

• Pr
• so c ial Pr
• pe nsity wo r

ks as a sing le mo de r ato r

• L
• w pr
• -so c ial individuals

saw lar g e r e ffe c ts o f the tr e atme nts (in bo th pr

• -

so c ial fac to r s)

• T

he sho ve and the hug ar e the mo st e ffe c tive appr

• ac he s in lo w pr
• -

so c ial individuals.

High pr

• -soc ial (othe r
• or

ie nte d e mpathy) c onsume r s will make highe r c ontr ibutions to the public good.

Hug s, Nudg e s, Sma c ks, a nd Sho ve s

Hug = R e war ds + ac tive e ffor t



Re w a rd fo r a c ti

• n/ i

na c ti

• n – mo ne ta ry i

nc e nti ve fo r lo w e ri ng c ho le ste ro l

Nudge = R e war ds + passive e ffor t



Pro vi si

• n o f i

nfo rma ti

• n – Ca lo ri

e c o unts o n me nus



Cha nge s to e nvi ro nme nt – De si gni ng b ui ld i ngs w i th fe w e r li fts



Cha nge s to d e fa ult – Ma ki ng sa la d the d e fa ult si d e o p ti

• n

i nste a d o f c hi p s



Use o f no rms – Pro vi d i ng i nfo rma ti

• n a b o ut w ha t o the rs a re

d o i ng

Smac k = Punishme nt + ac tive e ffor t



Fi na nc i a l d i si nc e nti ve s – T a xa ti

• n o n c i

ga re tte s Re stri c ti ng c ho i c e – Ba nni ng ta ke a w a ys se tti ng up c lo se to sc ho o ls

Shove = Punishme nt +passive e ffor t



Eli mi na ti ng c ho i c e – Ma ki ng c e rta i n fo o d s a nd d rugs i lle ga l, i mp o si ng fi ne s

Re se a rc h Que stio ns

Wha t we know

• T

he fo ur po lic y le v ers c an be suc c e ssful at affe c ting be hav iour c hang e

Wha t we don’t know

• Ho w (diffe re nt type s o f)

c o nsume rs w ill re spond to e ac h o f the fo ur le v e r s w he n it c o me s to T

• U

pric ing

Re se a r c h Que stions

• RQ 1: Ho w do c o nsume rs re spo nd to

e ac h o f the fo ur po lic y le v ers?

RQ 2: Ho w do e s the initial e ffe c t de c ay

• v e r time fo r e ac h le ve r

?

RQ 3: Ho w do indiv idual diffe renc es

influe nc e c o nsume r re spo nse s to the le v e rs?

Que stio n: is the fo c us o n T

• U still appro priate ,

g e ne ral po we r de m and, o r sho uld we fo c us o n sm art m e te rs installatio n?

De pe nde nt Va ria b le s

 Co nsume r re spo nse s:

 Willing ne ss to fo rg o e le c tric ity c o nsump tio n

fo r the c o mmo n g o o d .

Que stio n: what o the r be havio urs wo uld yo u like to influe nc e with po lic y?

I ndividua l diffe re nc e s -o p tio ns

 Wha t d o we think mig ht influe nc e the e ffe c t

• f the le ve rs o n c o nsume r re sp o nse s?

 So c ial/ e nviro nme ntal c o nsc io usne ss  De mo g raphic s – g e nd e r, ag e , inc o me  Po litic al pe rsuasio n (c itize n type )  Struc tural e ne rg y e ffic ie nc y to o ls e .g . so lar PV,

batte rie s

 L

e arne d / Pe rc e ive d he lple ssne ss

 Se lf e ffic ac y  Pe rc e ive d be havio ural c o ntro l

Que stio n: what e lse do yo u think influe nc e s the e ffe c tive ne ss o f e ne rg y po lic y?

Re se a rc h Me tho d

E xperimenta l L a b Desig n

• Ab stra c t pub lic g o o d g a me
• Q ue stio nna ire inc luding indiv idua l diffe re nc e s

like pro so c ia l pro pe nsity

Sa mple

• 160 pe o ple , g e ne ra l po pula tio n
• 10 g ro ups o f 16 pe o ple (4 g ro ups pe r se ssio n)

Da ta Clea ning a nd Ana lysis

• T-Te sts a nd ANOVAs – Whic h le ve r is mo st influe ntia l,

Ho w do e s this de c a y o ve r time

• ANCOVA a nd Fa c to ria l ANOVA – Whic h individua l

diffe re nc e s influe nc e the e ffe c tive ne ss o f the le ve rs fo r e nc o ura g ing pro so c ia l b e ha vio ur?

Ho w do e s the g a me run?

Intro duc tio n Sc re e n Co ntro l Che c k Que stio ns Co ntrib ute Sc re e n Ro und Fe e db a c k Sc re e n Surve y Pa yme nt Pa g e

Inte rac tive Disc ussion

Re visiting o ur Disc ussio ns

 E

le c tric ity usag e as a so c ial d ile mma: What d o yo u think? What d o c o nsume rs think?

 I

s the fo c us o n T

• U

still appro priate ?

 What o the r be havio urs w o uld yo u like to influe nc e

w ith po lic y?

 I

nd ividual d iffe re nc e s and be yo nd - w hat e lse d o yo u think influe nc e s the e ffe c tive ne ss o f e ne rg y po lic y?

 Ho w a re c usto me rs re spo nding to

e le c tric ity ta riffs no w?

 Is the re a po lic y pre fe re nc e fo r c ho ic e o r

re wa rd to e nc o ura g e diffe re nt c o nsume r b e ha vio ur in e ne rg y?

 Othe r tha n pric e , wha t is impo rta nt in

c ha ng ing c o nsume r b e ha vio ur in e ne rg y?

 Ho w do yo u fo re se e using the se finding s in

yo ur ro le / o rg a nisa tio n?

 Wha t c a n b e do ne to ma ke nudg e s,

hug s, smac ks, and sho ve s o pe ra tio na l?

 Ca n po lic y c ha ng e s he lp to pro mo te the

use o f nudg e , hug , smac k and sho ve ?

Ne xt Ste ps

 Disc ussio n to da y  Sub missio n o f dra ft re se a rc h pla n  E

thic a l c le a ra nc e , pre pa ra tio n, re c ruitme nt

 F

inal r esear c h plan (Stage 3)

 T

he n o n to Sta g e 4: Co nduc ting the e xpe rime nts

T ha nk yo u!