Understanding the financial incentive conundrum: A meta-analysis of the effectiveness of financial incentive interventions in promoting energy conservation behavior. (October 2022)

• Record Type: Journal Article
• Authors: Sloot, Daniel; Scheibehenne, Benjamin
• Is Part Of: Renewable & sustainable energy reviews. Volume 168(2022)
• Publication Date: 2022-10
• Subjects: Meta-analysis -- Financial incentives -- Energy conservation -- Demand response -- Demand-side management -- Dynamic pricing; Renewable energy sources -- Periodicals; Power resources -- Periodicals; Énergies renouvelables -- Périodiques; Ressources énergétiques -- Périodiques; 333.794
• DOI: 10.1016/j.rser.2022.112761
• Languages: English
• ISSNs: 1364-0321

Abstract

Abstract: Household energy conservation plays an important role in the mitigation of greenhouse gas emissions and the transition towards a sustainable energy system. Financial incentives have been a popular intervention to facilitate lowering one's electricity consumption, and they have been used to target both overall conservation and conservation at specific times of high demand, also referred to as peak consumption. However, recent findings are ambiguous with regard to the effectiveness of financial incentives, and research has thus far not clearly disentangled the effects of incentives on overall and peak consumption. This study provides meta-analytic evidence on the effectiveness of financial incentive interventions and uses meta-regression techniques to systematically evaluate differences in incentive characteristics and the contexts in which they are implemented. Using data from 72 studies (with 111 observations that include data from over 400, 000 households), we compare the effects of financial information and actual incentives (e.g., pricing) on overall and peak electricity conservation. Financial incentives lead to a small decrease in overall consumption −1.83%) and a larger decrease in peak consumption (−10.00%), and effects of financial information are smaller compared to effects of actual incentives. Moreover, we find heterogeneous effects that can be further explained by differences in incentive types, characteristics, enhancing technologies, and study-level characteristics. We discuss theoretical as well as policy implications arising from these findings. Highlights: Meta-analysis of financial incentive effects on household electricity conservation. Incentives have a larger impact on peak (compared to overall) consumption. Effects of incentives on conservation show a large heterogeneity. Incentive characteristics and study-level variables influence the effect size. Specific types of peak pricing and the use of automation can enhance effects.