There are numerous ways to steer individual behaviour towards sustainability. One example are nudges, such as self-set goals. Nudges can help individuals to implement privately or socially desirable actions, and are therefore a frequently discussed policy tool to encourage resource conservation.
A ZEW study is the first to conduct a field experiment to analyse the effectiveness of self-set goals in reducing household energy consumption. Over a period of four months, participants used an app to scan their electricity meter and submit the scan to their energy supplier. All app users were given tips on how to save electricity. A randomly selected group (treatment group) was further granted access to a goal-setting function, where the users were prompted to set themselves goals for their energy consumption in the upcoming month. At the end of each month, users were informed whether they had reached their goal.
Surprisingly low demand for the app
Demand for the app was relatively low and declined over time, despite a large-scale marketing campaign and financial incentives. In addition, the goal-setting function led to fewer participants using the app over time. Only an additional monetary incentive for saving electricity reversed this trend. This implies that the goal-setting function was perceived to be a disadvantage rather than an advantage of the app. At the same time, the treatment group did not reduce energy consumption significantly compared to the control group.
The information collected in a survey among app users provides insights into possible mechanisms underlying these results. The energy consumption of many participants was already below the national average, even though they had a larger household size and a larger house or flat. Moreover, users are not characterised by any of the behavioural economic parameters used in theoretical models to explain the effectiveness of self-set goals. Consequently, unfavourable selection into the pool of app users is a leading explanation for the low demand for the goal-setting function and the insignificant effects on energy consumption: Only those individuals selected into the app who were unlikely to profit from the goal-setting tool. The welfare effects of the self-set goals further confirm this notion. An analysis of usage behaviour shows that the average user is willing to pay 7.41 euros to avoid the goal-setting nudge. In summary, the study raises doubt on the effectiveness of self-set goals in reducing energy consumption. Furthermore, the study questions the use of smartphone apps to scale up behaviourally-motivated energy policies. It will be crucial to identify and target individuals for whom setting goals will lead to a reduction in energy consumption.