DraftFCB | 2010 Agency of the Year

Peer Pressure or Instant Gratification?

// August 24th, 2010

Which is a more effective method of behaviour modification, instant gratification or peer pressure? There isn’t a universal answer to that question, but recent trials conducted by energy utilities in the United States and Canada provide some interesting comparative results.

A number of North American utilities have been undertaking research to understand the most effective methods of changing human behaviour to achieve power conservation.

Their efforts, summarised in a recent white paper by Minnesota operator Franklin Energy, identify these broad categories of programmes and solutions which might generate energy savings through residential consumer behaviour change:

1. In-home devices and displays providing real-time feedback on energy use (instant gratification)
2. Customised, regular feedback about the household’s performance relative to others (peer pressure)

THE CHALLENGE

As the White Paper observed:

Many of the ways in which consumers use energy at home are the result of behaviours such as how and when we turn on and off lights and televisions in the rooms we use, how we set and adjust our thermostats, our practices in doing laundry and running our dishwasher, even the length of the showers we take and whether we unplug our cell phone chargers when they are not in use. Impacting these habits is difficult for a number of reasons. It is important to recognize that electricity is an enabling product – consumers don’t turn on the television or the lamp to use energy, they want to be entertained and they want to see. Electricity is an intangible necessity that, like toilet paper is a dissatisfier we take for granted until it is missing. This is the first challenge of any behaviour change program; they must get people to notice and care about their energy use.

CATEGORY 1: INSTANT GRATIFICATION

There is typically little correlation between our use of energy and the practical implications of our action: neither the cost of doing so nor the resource usage are evident at the time. That sticker shock awaits us when we receive the monthly bill.

In the instant feedback trials, consumers purchased in-home devices and displays that provide real-time feedback (i.e., instantly, or in a very short period of time) from their meter via a mobile monitor. Such devices allow users to experiment and see the impact of their behaviour (e.g., turning on/off lights and appliances, changing routines from day-to-day, etc.).

This Instant Gratification works: multiple utilities have demonstrated the savings achieved by customers using these devices. For example, a 3% annual energy savings has been reported in an ongoing NSTAR pilot, and a 6.5% annual savings was observed in a 500-home pilot by conducted with Hydro One’s residential customers in Ontario.

However there are downsides: the opt-in nature of these programmes (e.g., soliciting customers to purchase and install devices) leads to low adoption rates and limited potential for scaling programmes. And several programmes have documented significant drop-out rates among participants as the novelty of the device wears off, monitors are put away, or batteries die; this raises questions about persistence and cost effectiveness of the devices.

CATEGORY 2: PEER PRESSURE

35,000 homes serviced by the Sacramento Metropolitan Utility District (SMUD) began receiving either monthly or quarterly reports comparing their energy use to that of their neighbours (typically a sampling of 100 nearby homes with similar size and demographic characteristics).

These reports offering neighbour comparisons have motivated SMUD’s customers to make changes to energy use, lowering demand by 2% in a broad non-targeted population. This programme demonstrates the power of peer pressure: individuals are motivated much more by their perceptions of what other people do and find acceptable than they are by other factors such as the opportunity to save money or conserve resources, contrary to even their own perceptions of motivation.

The opt-out (vs. opt-in) nature of reports sent at the discretion of the utility to customers, allows utilities to design and conduct rigorous large-scale pilots and target entire populations in desired segments. Reports can be customized based on housing, demographic, and psychographic factors to provide relevant feedback and customized energy-savings tips that are found to have the greatest appeal.

THE RESULTS

The trials suggest that Real-time Feedback (Instant Gratification) delivers significantly better results in the short term; but the effect is perhaps neither scalable (where consumers must purchase the devices) nor sustainable (because of wearout factors).

On the other hand, Peer Pressure (in the form of neighbour comparisons) has been shown to provide ongoing gains; and (because no effort is required from the consumer) can be readily implemented across a wide range of energy users.

These findings are of course specific to the energy sector; yet they do provide useful indicators on a wider scale as to the transient nature of instant gratification versus peoples’ perennial  urges to “keep up with the Joneses” (or at least to be seen to be doing so).