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Making ‘Smart Meters’ smarter? Insights from a behavioural economics pilot field experiment in Copenhagen, Denmark

Author:
  • Simon Bager
  • Luis Mundaca
Publishing year: 2017-06-01
Language: English
Pages: 68-76
Publication/Series: Energy Research and Social Science
Volume: 28
Document type: Journal article
Publisher: Elsevier

Abstract english

This paper examines the relationship between loss aversion and consumer behaviour in a non-price policy intervention that followed the installation of smart meter (SM) technology. Drawing upon insights from behavioural economics, we propose that consumers underestimate potential gains and overestimate potential financial losses resulting from electricity use. To test the hypothesis, we carried out a pilot study involving the installation of SM technology in Copenhagen, Denmark. The analysis used two baselines, and the differential effects revealed that the provision of loss-framed, salient information reduced daily demand by 7–11%, compared to unframed information. Reductions in standby consumption were more pronounced, with a differential effect of 16–25%. Despite the limitations inherent in a pilot study, notably the small sample size, the findings suggest that policies that address SM technology need to consider not only the pure provision of information, but also how it is designed and presented to users. Several aspects for further research are identified.

Keywords

  • Business Administration
  • Social Sciences Interdisciplinary
  • Behavioural economics
  • Demand-side response
  • Loss aversion
  • Residential sector
  • Smart meters

Other

Published
  • ISSN: 2214-6296
Luis Mundaca
E-mail: luis.mundaca [at] iiiee.lu.se

Senior lecturer

The International Institute for Industrial Environmental Economics

+46 46 222 02 57

344-A

53


International Institute for Industrial Environmental Economics (IIIEE)

Lund University P.O. Box 196, 22100 Lund, Sweden
Visiting Address: Tegnérsplatsen 4,Lund

Telephone: + 46 46 222 00 00 Fax: + 46 46 222 02 10