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

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

Who we are Professor Uwe Dullec k Professor Rebeka h Russell-Bennett So c ia l Ma rke ting a nd Co nsume r Psyc ho lo g y Be ha vio ura l E c o no mic s Pro fe sso r o f Ma rke ting Pro fe sso r o f E c o no mic s, Q UT Q UT Busine ss Sc ho o l Q ld Be ha vio ura l E c o no mic s G ro up (Q uBE ) Adjunc t Pro fe sso r, Ho n. Pro fe sso r o f Be ha vio ura l E c o no mic s, Na tio na l U niv e rsity o f Ire la nd, G a lwa y Cra wfo rd Sc ho o l o f Pub lic Po lic y ANU 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 Co nsume r Ele c tric ity Pric e Inde x, Infla tio n Adjuste d 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 o r the supply si de So ur c e : Da ta fr o m ABS, G r a p h fr o 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

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 It is bound up with much electricity routine ne a and h d habi bit consumption takes place (Shove, 2003). without ut a any c cons nscious us consid ideration of consumers usage (Thøgersen & Grønhøj, 2010; Pierce, Schiano, & Paulos, 2010). It is considered a low- Electricity is ‘abstr tract, t, involvem emen ent product (Wong invisible a and u untouchable’ (Darby, 2006) & 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 o influ luence t the acceptab abil ilit ity o of s soc ocial i al ideas as and involve considerations of product planning, pricing, communication, distribution, and marketing research. Beha vioura l E c onomic s  Behav aviou ioural E al Econom omic ics (Thaler and Sunstein, 2009): studies effects of psychological, Soc ia l social, cognitive, and emotional factors on economic decisions, provides important Ma rketing insights into how people make choices. Contrasts this with normative insights from economics.  Public lic P Pol olic icy (Hertier & Lehmkuhl, 2008): Public Polic y 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 our t to ac o accom ommod odat ate t the legis islat lator ors d deman ands”.

Be ha vio ura l E c o no mic s: I nsig hts a nd L imita tio ns ffic ie nc y  De fa ults a nd E 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 o 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 oss 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 Consumer empowerment Consumers are more motivated by Consumers need to feel in short-term, self-oriented options control than long-term and altruistic Pleasure principle Value-orientation Consumers make choices that Consumers act to minimise pain deliver them value- their and maximise pleasure definition of value not ours Social orientation Segmentation Individuals do not act alone - homo Consumer choice goals and sociologicus choice processes differ by household and by individual Knowledge-action gap More education does not equal more action

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 osoc ocial P Prop opensity, 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 own c consumption, i inc ncurring a a person onal c cost, t to c con ontribute t to a o a c com ommon r resou ource ( (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 Hug (so c ia l ma rke ting ) Sma c k (pub lic po lic y) Disinc e ntiv e Punishme nt E g . Po sitiv e re wa rd fo r E g . F ining fo r ve re wa rd re duc e d c o nsumptio n o v e rc o nsumptio n a nd me e ting ta rg e t Inc e nti Nudg e (b e ha vio ura l Shove (pub lic po lic y) e c o no mic s) E g . Po lic ie s re stric ting E g . Inc re a sing the pric e s whe re a nd ho w o ne b e yo nd a c e rta in c a n c o nsume the g o o d c o nsumptio n po int 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 Pra c tic a l Implic a tions: Polic y Development in T he sho rt-te rm e ffe c ti ve ne ss o f the the Pro- E nvironmenta l hug appro ac h Spa c e • Nanny State vs T he i ne ffe c ti ve ne ss o f the nudg e Fre e C ho ic e and sm ac k • De laying the Saturatio n Po int 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 Se g m e ntatio n c o nsum pti o n. Male s and fe m ale s re spo nd di ffe re ntly to i nte rve nti o n appro ac he s. 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. 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 8 7 6 5 4 3 2 1 0

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.