Using behavioural economics to save energy

The gas crisis is currently an issue at the top of the political agenda. Both the European Commission and the German government are taking several measures to ensure the security of supply for the coming months.

Despite all of these measures, the German regulator Bundesnetzagentur is currently warning of a gas shortage in Germany that can only be avoided if gas consumption is considerably reduced.

With winter fast approaching and in the face of skyrocketing energy prices, the public debate in Germany has recently focused on the financial burden on consumers and how it can be relieved. As gas prices have significantly increased due to reduced gas supplies, the German government intends to lower and regulate gas prices for households. Some of the discussed instruments have never been used before and will be a strong intervention into the market, partially distorting price signals that would usually inform actual gas availability.

However, one thing is clear: Not only must gas be affordable for everybody, but basic supply must also be ensured. To reach both goals, we all need to consume less natural gas.

The use of behavioural economics can provide insights on how to mobilise customers to help overcome the current gas crisis and get through the winter. In particular, behavioural economics can help create additional incentives to reduce households’ gas consumption despite the prices being distorted by state interventions. Examples of such incentives include, publicly visible awards for “energy saving champions” and the use of group identity and social comparison mechanisms to help realise existing saving potentials and reduce energy consumption in households.

Read the full version of the article in German below.