Electricity awareness and consumer demand for information

With the envisioned growth in the residential electricity demand and increased share of intermittent renewables in the supply mix, consumers will need to be better informed about their electricity consumption and to play an active role in managing their electricity use. However, consumer inattention and lack of information are ubiquitous, especially in household energy‐related settings. Thus, using a novel survey and actual monthly electricity consumption data, this study set out to measure the level of awareness about electricity bills, prices and costs among some Finnish households—as captured by the answers to six questions—and to investigate whether higher levels of “electricity awareness” are associated with electricity savings. In addition, this study analyses the willingness to receive extra information about energy consumption and savings and how it differs between “electricity aware” and “electricity unaware” respondents. The results indicate low levels of “electricity awareness” among the respondents of the survey. Compared to the respondents with little knowledge about electricity bills, prices and costs, the respondents with higher levels of “electricity awareness” tend to consume less electricity. Higher levels of awareness about electricity use and consumption might “materialize” inconspicuous consumption patterns, as opposed to more general facts about the largely invisible environmental consequences of everyday practices. More than two‐thirds of the total number of respondents would like to receive additional information about energy consumption and how to save energy. However, there exists a significant portion of “electricity unaware” respondents who are not only unwilling to receive such information, but are also unaware of their own knowledge deficits. To maximize the impact of any information strategy, decision makers should attempt to engage with this type of consumer; by becoming more aware of their knowledge deficits, people might become more receptive to information that can benefit them.     

Money,Comfort or Environment? Priorities and Determinants of Energy Efficiency Investments in Irish Households

Energy efficiency is an effective strategy to reduce household energy consumption. Investments in energy efficiency measures (EEMs) result in reduced energy bills and increased comfort for households, while also contributing to national environmental targets. This article examines an energy efficiency scheme in Ireland and investigates the factors that determine investments in energy efficiency measures and the motivations of Irish households to participate in energy saving programs and adopt EEMs. The paper investigates three key research questions: the determination of investments in EEMs, with special focus on motivations and their relative importance; the consistency of motivations over the course of the decision-making process; and the consistency of determinants and motivations for investments in EEMs across different measures. The paper studies the implementation of seven energy efficiency measures in residential houses throughout Ireland. Results indicate that the decision to ultimately apply and invest in EEMs is mainly driven by monetary or economic factors such as gains in energy savings and the private cost of the measures. Comfort gains are found to be a secondary factor and environmental benefits of EEMs are found to be of little concern when making investment decisions. Finally, we suggest focusing on providing information about the benefits of the EEMs on energy savings and improvements in comfort in order to increase the adoption of EEMs by households in Ireland.     

California Customer Load Reductions during the Electricity Crisis: Did They Help to Keep the Lights On?

During summer 2001, Californians reduced electricity usage by 6% and average monthly peak demand by 8%, compared to summer 2000. These load reductions played an important role in avoiding the hundreds of hours of rotating power outages predicted several months prior. Many factors affected electricity use and peak demand in summer 2001, including weather, changes in the State’s economy, and deliberate consumer responses to a variety of stimuli associated with the crisis. This paper assesses the roles played by these contributing factors, with a special focus on the extraordinary efforts made by Californians to reduce electricity consumption. We review the role of media coverage and informational campaigns on public awareness and the impact of rate increases and a variety of publicly funded programs in reducing electricity consumption. We also draw lessons for other regions that may be faced with the prospect of electricity shortages.     

Electricity saving behavior of households by making efforts,replacing appliances,and renovations: empirical analysis using a multivariate ordered probit model

This study empirically explores the determinants of household electricity saving behavior based on a sample of Japanese households. Our study makes four contributions. First, we examine the short‐term saving action of making efforts, the medium‐term saving action of replacing appliances, and the long‐term saving action of undertaking renovations. Second, we consider not only the physical characteristics of households but also behavioral characteristics, such as their understanding of the importance of energy saving and willingness to save energy. Third, in our analysis, we assume that appliances and housing facilities have the electricity‐saving capability and service‐providing capability. While previous studies focus on the former, consumers in reality consider both capabilities. Fourth, we consider the optimization by households and include broad types of appliances and renovations. Using a multivariate ordered probit model with data on 518 Japanese households in 2012, we obtain the following results. First, in addition to the demand response, the effort level is determined by behavioral, rather than by physical characteristics. Second, the motivation behind appliance replacement is durability, rather than electricity‐saving and service‐providing capabilities. Third, appliance replacement is enhanced by an understanding of the importance of energy saving, rather than by the willingness to save energy. Households can replace appliances because of social pressure, even if they are not so concerned about saving energy. Fourth, households are willing to renovate housing facilities even though they pay a higher cost for the greater saving capability rather than for the service‐providing capability. However, such renovation is not influenced by internal incentives, but by physical aspects of the house, such as size, age, and type.     

Consumer laundry practices in Germany

Sustainability is a guiding principle for a responsible, future‐oriented 21st century lifestyle and this already begins in private households with the daily household tasks. Approximately 25% of an average household's electricity consumption is required to do the laundry and dishwashing – 5% alone is for washing clothes with a corresponding energy consumption of 6 billion kilowatt hours. In addition, 600 000 tonnes of detergent and 330 million cubic metres of water are used for textile care in Germany. These figures provide the rationale for the scientific study of current practices of using washing machines and for a resulting estimate of the latent energy‐saving potential in German households. In the context of the in‐home study presented here, 236 private households throughout Germany were studied with respect to their washing practices and existing knowledge about topics on the sustainable, energy‐saving use of their washing machines. Overall, across all households 2867 wash cycles were individually recorded and subsequently analysed over a 4‐week period. The results of this study show that washing machines tend to be underloaded, and therefore maximum loading of the machines could lead to a reduction of wash cycles per household. With respect to detergent dosage, it was determined that the consumer does not adjust the dosage to the textile type, load size, soil level and/or water hardness, and this can lead to under‐ or overdosing depending on prevailing conditions. Finally, the selection of the wash temperature showed a 90°C/95°C programme was only chosen in 2.3% of all recorded wash cycles, however, every fourth cycle was completed at 60°C. Therefore, adjusting the load size and detergent dosage as well as selecting the right wash temperature are key themes to be taken into account in future consumer communication about energy‐saving households.     

Critical Success Factors for Peak Electricity Demand Reduction: Insights from a Successful Intervention in a Small Island Community

This paper examines a successful residential peak electricity demand reduction project which employed a multi-disciplinary approach. The purpose of this study was to examine the critical success factors necessary for reducing peak demand and total energy consumption in a small Australian island community. This case study research is based on qualitative data obtained from semi-structured, in-depth interviews with residents from 22 households. It is proposed that the results of the examined project are transferable to other communities if the utility is able to develop the necessary trust, access, influence, and partnership with residential consumers required to create the environment for electricity demand reduction success. Findings from this research highlight the potential approach for future policymaking aimed at reducing peak electricity demand and total energy consumption in multiple communities, thus helping achieve government low carbon targets while reducing infrastructure spending.     

Consumer voices: adoption of residential energy‐efficient practices

The purpose of this research is to identify constraining variables that may impinge on adopting energy‐efficient practices, materials, equipment and technology in households. The intent is to uncover relationships of attitudes, beliefs, knowledge and other resource constraints to: (1) existing housing adaptations and adjustments for energy efficiency; and (2) more efficient use of energy in homes. A second objective is to identify existing practices used to reduce energy use and the adaptations made to the existing structure, materials, equipment and technology for energy efficiency as well as their intentions to make future adaptations. Constraint variables include knowledge of existing energy‐efficient practices and technology; economic constraints (household income, cost as a problem, financial need and existing energy costs); obstacles to making changes (lack of information, assistance, time, cooperation, trained persons and the condition of home); and demographic variables (age, education level and urban/rural). Attitude and belief constraints include measures of felt responsibility for energy use‐related actions that impact the natural resources and environment, and measures of concern. These constraints may impinge on or contribute to making energy‐efficient changes in residential households. Questionnaires were mailed to a random stratified sample of 800 households in Nebraska (US state) in April and May of 2008, resulting in a 29% return rate. The analysis indicates that the research produced information about constraining factors that impact the existing energy‐efficiency levels of households. The use of energy‐efficient equipment and technology, and behaviour practices that reduce energy use are related to those barriers. However, residential energy use and behaviour change result from a range of psychological and contextual influences on behaviour. Behaviour is often inconsistent with attitudes because of the presence of various constraining factors that preclude consistency with behaviour. Educational programmes have a challenging task if they are to alter attitudes and norms to overcome situational constraints. It may be more fruitful to educate and to remove the constraints impinging on those who already have a positive attitude about the need to increase energy efficiency for whatever reason.     

A theory of the competitive saving motive

Motivated by recent empirical work, this paper formalizes a theory of competitive savings — an arms race in household savings for mating competition that is made more fierce by an increase in the male-to-female ratio in the pre-marital cohort. Relative to the empirical work, the theory can clarify a number of important questions: What determines the strength of the savings response by males (or households with a son)? Can women (or households with a daughter) dis-save? What are the conditions under which aggregate savings would go up in response to a higher sex ratio? This theory can potentially help to understand the savings patterns in China, India, Vietnam, Singapore, Hong Kong, and other economies that have experienced a dramatic increase in the pre-marital sex ratio.     

Lessons learned from renewable electricity marketing attempts: A case study

The choice of subscribing to renewable electricity has been available to Australian households for more than a decade, yet consumer uptake remains low for some green marketers. This case study uses a retailer's perspective to examine the implementation of a green marketing program for a renewable electricity retailer. Based on interviews, internal company documentation, and secondary research, findings show that effective differentiation for renewable energy is required to increase consumer involvement levels and the likelihood of consideration. While consumers lack understanding of, and interest in, renewable energy, the marketing program relied on customers to seek information. It was apparent the success of green marketing programs depends on the integration of education into a carefully targeted marketing program emphasizing functional and emotional values to differentiate renewable energy and simplify consumer decision-making processes.     

Sparen in Zeiten niedriger Zinsen — wirtschaftspolitische Unterstützung nötig?

Critics of the low interest rate environment claim that German households have had difficult times generating positive returns from their savings since interest rates reached levels around zero. Therefore, direct public support is increasingly being called for. This article shows that, from a macroeconomic perspective, households have in fact generated positive real returns to date. However, portfolio returns may vary among households due to differences in portfolio structure and size. In addition, aggregate portfolio returns might decrease in the years to come if nominal interest rates remain low. Regarding policy responses, it is therefore proposed to undertake measures which increase total factor productivity and improve the financial literacy of households. Both approaches promise to be more effective than direct public support of savings.     

Dynamisierung kapitalgedeckter Altersvorsorge

On the basis of the annual reports of all the life insurance companies covered by the Federal Financial Supervisory Authority (BaFin), the adjustment of payments over the time period 2002 to 2012 is analysed for Germany. The analysis unveils large differences in the adjustment rates of the insurers, not only among companies but also over time. Therefore a steady income stream, a constant income level and the reliability of payments are not ensured for policy holders. In general, the adjustments lead to increasing inequality of income during retirement and rising income heterogeneity in private households. Even worse, these forms of income provision during retirement are not able to compensate for the reduction in the benefit level of statutory old age provision in Germany.     

The Responsiveness of Households to Energy Demand Management Initiatives: Segmenting by Household Types

Segmentation is often a complex and costly process, which commonly involves identifying groups with differing attitudes and behaviors or demographics. However, the segments generated may not adequately explain differences between consumers, or it can be difficult to identify households for target marketing, which consequently makes it difficult to use segmentation in practice. In this paper we present segmentation by household type as a simple method of segmentation, accessible to nonprofit organizations with limited resources and able to be employed using a secondary data set or with relatively simple data collection and analysis. Despite its simplicity, our findings show that this form of segmentation differentiates well between segments in terms of their actual electricity use, their past efficiency behaviors and preferences for efficiency programs. The results of focus groups and a survey of 4,000 households reveal, among other things, the effect of having children and of marital status on energy use and efficiency behaviors, the high curtailment but low investment behaviors of single parent households, and the low efficiency behaviors of shared households.     

Young People Are the Front Lines of Financial Inclusion: A Review of 45 Years of Research

Amidst concerns about percentages of households that remain unbanked or underbanked, policy endeavors have emerged to promote financial inclusion by making financial products such as savings accounts readily available. While these endeavors have primarily concentrated on households, young people may be the front lines of financial inclusion because they may be more likely to be banked in young adulthood and beyond when they start off with savings accounts earlier in life. This article addresses young people's financial inclusion by comprehensively reviewing 60 research studies on young people's savings, discussing the role of the family in young people's financial inclusion, discussing financial inclusion from an institutional perspective, presenting policy implications, and identifying gaps in knowledge and opportunities for research. Policies that open savings accounts for young people early in life may be a promising strategy for extending financial inclusion and preventing unbanked or underbanked status later in life.     

Financial capability and emergency savings among South Africans living above and below the poverty line

Emergency savings provide a buffer against financial shocks, particularly among low‐income households. Despite the importance of these funds in lessening financial hardship, many households have not set aside emergency funds. It has been suggested that financial capability may play a role in financial behaviour. Therefore, this study considers whether financial capability is associated with saving for emergencies and whether there are differences in factors that predict emergency savings behaviour among those living below and above the poverty line. Using data from a sample of South Africans, logistic regression is used to determine the predictors of emergency savings. The study finds that those with higher levels of financial capability, related to financial self‐efficacy and having access to a bank account, are more likely to have emergency savings compared with those with lower levels of financial capability. However, no evidence is found to suggest a relationship between objectively measured financial knowledge and emergency savings. Therefore, the findings suggest that self‐assessed financial ability, as measured by financial self‐efficacy, might be more important than objectively assessed ability in the context of individuals making responsible financial choices. Differences in the predictors of emergency savings for those living above and below the poverty line related to socioeconomic and demographic differences, whereas the same financial capability predictors were significant predictors in both samples. The study provides unique insights into the predictors of emergency savings in a developing market context and identifies the characteristics of those who are likely to be financially resilient to unexpected economic shocks. The importance of the broader financial capability construct in predicting emergency savings, for both those living above and below the poverty line, suggests that programmes aimed at encouraging emergency savings should focus on enhancing financial self‐efficacy and financial inclusion.     

Saving for Retirement: Understanding the Importance of Heterogeneity

A large number of households spend much of their working lives not engaged in saving for retirement, in contrast to the basic proposition that motivates the lifecycle model of consumption. This article discusses the relationship between this observed savings behavior and three specific areas of heterogeneity in the household consumption problem: budget constraints, savings motives, and preferences. Using the Surveys of Consumer Finances, the article shows that saving for liquidity (precautionary motives) and saving for specific purchases (like housing and education) compete with saving for retirement and may explain why the median household approaches the last years of its working life with only a year’s worth of income in financial assets. Another part of the explanation is shown to be high discount rates or rates of time preference, which cause households to engage in “buffer-stock” saving over the earliest years of their working lives. Heterogeneity in motives and preferences for saving present a challenge to financial professionals and policy makers who hope to encourage more people to save actively for retirement. JEL Classification D910     

Encouraging Tax‐Time Savings with a Low‐Touch,Large‐Scale Intervention: Evidence from the Refund to Savings Experiment

Low‐ and moderate‐income households often struggle to save, but the annual tax refund represents a prime opportunity for these households to save toward their financial goals or build their emergency savings. This paper presents the results of a randomized, controlled experiment embedded in a free tax‐preparation product offered in 2013 to low‐ and moderate‐income households. The experiment involved approximately 470,000 filers and assessed the impact of behavioral interventions on their savings behaviors. The results show that filers exposed to the treatments, which involved the established behavioral‐economics techniques of anchoring, choice architecture, and persuasive messaging, were more likely than a control group to save their tax refund and, on average, saved more of the refund. A follow‐up survey of these tax filers found that the treatments were associated with saving more of the tax refund six months after filing. The findings also show that anchors encouraging filers to deposit certain amounts are more effective than persuasive messaging emphasizing savings.     

Verteilungswirkungen des Erneuerbare-Energien-Gesetzes

The ongoing economic criticism of the German Renewable Energy Act (EEG) recently started focusing on distributional effects, too. A team of authors at the Cologne Institute for Economic Research is worried about high costs for electricity consumers. They argue since electric power consumption is only slightly correlated with income, the fi nancial burden of the EEG is substantially higher for low-income households than for high-income households. This regressive effect is even increased since particularly high-income households have installed photovoltaic systems and thereby gain from green power subsidies. In contrast, other authors argue that this debate on distributional effects, while desirable, often scandalizes rather common issues of everyday economic events while ignoring the real EEG-induced redistribution effects, that is to say the EEG reallocation charge privilege for energy-intensive industries. These authors advise against drawing on partial analysis when discussing distribution-related issues of the EEG. A team of authors at the ZEW are concerned about the cost-effi ciency of the EEG which is the underlying reason for the recent discussions on distributional effects. The energy transition will entail large additional cost which will have to be carried. Increasing the effi ciency of governmental energy and climate policies will increase acceptance and attenuate distributional effects.     

Remittances and Financial Access: Is There Really a Link and for Whom? Evidence from Mexican Household Data

In policy discussions, it has frequently been claimed that migrants' remittances could function as a ‘catalyst’ for financial access among receiving households. This paper provides empirical evidence on this hypothesis from Mexico, a major receiver of remittances worldwide. Using the Mexican Family Life Survey panel (MxFLS) for 2002 and 2005, the results from the fixed effects logit model show that receiving remittances is strongly correlated with the ownership of savings accounts and to a limited degree with the availability of borrowing options. Effects are particularly important for microfinance institutions, and more important for rural households compared to urban households.     

Can behavioral nudges and incentives help lower-income households build emergency savings with tax refunds? Evidence from field and survey experiments

Tax refunds are an opportunity for lower-income households to accumulate emergency savings so they have cash on hand to cover expenses when income is insufficient. Our field experiments testing different behavioral interventions to encourage refund saving via online tax filing show small effect sizes (0.12–0.14) and a low aggregate savings rate (12%) that might be increased were filers to receive financial incentives. We test a key provision of the Refund to Rainy Day Saving and Financial Security Credit Acts using a survey experiment, finding that hypothetical refund saving jumps from 16% with no financial incentive, to 71% and 80% with 25% and 50% matches, respectively, findings which are mostly insensitive to refund size. Our results suggest that public policies to provide greater financial support—including stronger income supports—will better prepare lower-income households for financial emergencies than behavioral interventions to nudge refund saving.     

The Way into Bankruptcy: Market Anomie and Sacrifice Among Portuguese Consumers

Portugal ranks among the EU27 countries with higher levels of consumer indebtedness. Contrary to the trend observed in countries with similar indebtedness rates, Portugal has one of the lowest rates of consumer default. Previous studies (e.g., Frade et al. 2006) have identified three strategies that have contributed to keep levels of credit default low: reliance on savings, financial support from relatives and friends, and cuts in household expenses. These strategies have been widely used for the last decade and have been strained since the very beginning of the global financial crisis in 2007. We argue that these three strategies are near to collapse and consequently the levels of consumer default will rise steeply in the next years. The savings rate in Portugal has been declining over time, and the social networks are limited in their action due to the current crisis that affects everyone. In this article, we advance the hypothesis that sacrificing living standards is rooted on collective beliefs about the current economic crisis in Portugal and trust in political and market agents in line with the Theory of Market Anomie (Karstedt and Farrall 2006). The conclusions are based on macroeconomic statistics and on the results of a Web survey of 1244 Portuguese households, which focuses on attitudes towards the financial crisis, trust in political and economic institutions, and strategies to cope with the crisis. The results show that trust in financial companies (banks and insurance companies) and in the European Parliament promotes a sense of empowerment to contribute to the country economic restoration. This attitude induces citizens to avoid default by sacrificing living standards. But in the current austerity context, with low levels of trust in political institutions and detachment of the economy, consumers will be less prone to sacrifice. In this scenario, credit default and insolvency is expected to rise especially in those households most exposed to unemployment and to cuts in social benefits. This reality puts a huge and growing pressure on bankruptcy procedure, civil courts, and economic and social policies. Some adjustments should be made to the Portuguese Bankruptcy Code by facilitating and simplifying the bankruptcy regime in order to accommodate the increase in insolvency cases. But the improvement of the insolvency procedure will not resolve the situation of financial distress if the structural causes persist, such as unemployment and deterioration of salaries, and cuts in social benefits. A reform of the Bankruptcy Code facilitating and simplifying the bankruptcy regime should be coupled with measures that boost the economy and stimulate the labour market. Otherwise, Portuguese households will not have the resources necessary to benefit from the bankruptcy process and regain the control over their financial lives.