The Power of Peer Pressure in Energy Savings

With the federal government putting so much emphasis on energy-efficiency, researchers, business executives and politicians are trying to solve a key problem: How do you compel consumers and businesses to actually want to save energy?

It’s been widely recognized for a long time that people’s prime motivators for making environmentally friendlier choices are often personal -- saving money or staying healthy. But research is increasingly finding another big motivator: social pressure.

The Sacramento Municipal Utility District in California was among the first to test the theory that consumers would lower their energy usage if they knew how much energy they consumed compared to their neighbors and were recognized for their good deed. The idea: Everybody wants their neighbors to like and admire them.

According to a New York Times article, the Sacramento non-profit utility began sending out report cards to customers in 2008 showing how their home energy consumption compared to others in their area. Those who used less energy than their neighbors got smiley faces on their bills; those who used more got frowny faces. (The city eventually stopped sending out frowns because of some complaints.)

Six months into the experiment, the city noted a 2 percent drop in energy usage among those who received the personalized report cards, compared with those who received standard statements.

Since the Sacramento success, utilities in several other cities followed suit and started using report cards and positive reinforcement like smiley faces. (Xcel Energy, one of the largest electric and gas utilities serving Minnesota, recently started sending report cards to 35,000 of its gas and electric customers in St. Paul.)

But using social pressure tactics as a way to drive consumers to save energy is still evolving, and researchers say utilities and other businesses should find more ways to use peer pressure to their advantage.

Dan Ariely, a behavioral economist at Duke University and author of the book “Predictably Irrational,” claims the success of the Toyota Prius – the most popular hybrid auto on the road – shows that people are even willing to spend more money to reduce their environmental footprint. But the Prius’s success is largely tied to the fact that people drive their cars around, so others see them in them. Home and business energy consumption is far less visible and tangible, and so even though people spend far more on heating and lighting their homes than on gas, they’re less motivated to do something about it.

Mr. Ariely wrote in a 2008 blog post about his findings: “We don’t remember the price of heating, lighting, etc. We don’t see other people and think about how much they are paying to heat and cool their homes, and we don’t get any social bonus points for making our homes more efficient. What is the point of all of this? I think we can look at the success of the Prius, and by understanding the underpinning of its success, we can design incentives so that people start caring about making their homes more efficient.”

Do you think social pressure plays a big role in the decisions you make? What other ways could utilities and other businesses use it to get people to voluntarily reduce their energy usage?