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Answers from the LSE Thinkpanel on the Behavioural Economics of Energy Consumption
A range of international researchers have been engaged in a series of expert interviews and a LSE Thinkpanel on the Behavioural Economics of Energy Consumption.
The Thinkpanel approach provides tools to map and solve complex and dynamic problems. The Energy Thinkpanel resembled a structured brainstorming session about ‘possible pathways to sustainable energy futures’. By blending several data creation techniques, such as focus group discussion, problem solving and ideation techniques, the Thinkpanel approach captures the complexity, as well as expertise from a certain field. By facilitating discourse and interaction, the aim was to provide insights for possible strategies fostering more sustainable future scenarios and to discuss how politics, business and consumers can be better understood (and influenced) in order to make these futures happen.
The expert interviews where conducted with individuals from diverse backgrounds including leading experts in the fields of Behavioural Economics, Consumer Psychology, Economics, Financial Markets, Energy Trade, Economic Philosophy, Environmental Science, Greentech Investment, Organisational Psychology, Policy Innovation, Sustainability and Complexity, as well as Social Media.
Topline Findings
How able are we do deal with complex problems?
The global energy problem is one of the worst possible problems for human nature to deal with:
- Global interconnectivity and interdependence of many stakeholders, interests and variables
- Multi-criterion problem (e.g. water, meat, transportation etc)
- Delayed feedback (time lags, proximity)
- Co-evolution: The system won’t change, but culture and practice will evolve!
Who are the main actors in the system?
- Governments: legislate and provide incentives
- Industries: invest, innovate and implement new technology
- Consumers: influence supply and demand through economic behaviour and decision making
- EDUs: research, educate and provide information
- NGOs: raise awareness and provide social services
What are the dynamics of socio-economic change?
What is the role of the recession in enabling or hindering change?
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Too early to tell long-term effects
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Might be both: enabler and barrier to change
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Low oil price may hinder Greentech investments
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Bail out of banks and failing businesses has subtracted capital for sustainability investments
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Increased recognition of global interconnectedness and social responsibility
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Short term negative effects on consumption and commodity prices
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Emotional response of uncertainty, confusion and distrust at consumer level
What are current enablers and barriers to change?
Enablers:
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Government and legislation
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Incentives and investment
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Technology and innovation
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Awareness
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Education and communication
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Social media
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Aid
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Know-How transfer
Barriers:
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Confusion, frustration, paralysis, oscillation...
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Hypocrisy of government and businesses
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Resistance to change at consumer level
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Not enough joint up thinking and action
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Not enough knowledge
What actions are needed to influence upstream?
- Political innovation and streamlining policies at international level!
- More effective communication strategies and joined up campaigns linking back to grassroots and community level!
- Further investments in education, research and new technologies!
- Joint action and co-creation to speed up innovation!
- Reduce cynicism and hypocrisy by being transparent and authentic!
- Enable socio-economic change through new behaviour and a shift in mindset (from individualistic orientation to networked and cooperative)!
What actions does Behavioural Economics suggest to influence downstream?
- Use multiple ways to overcome human limitations
- Identify major parameters to influence behaviour and implement legislation after
- Create pre-commitment (social pressure, community feedback etc.)
- Remove barriers that prevent people from doing the right thing
- Give people an economic perspective on energy consumption (e.g. more sophisticated energy meters, pay as you drive, etc.)
- Educate people on the relationship of behaviour and energy consumption and the most effective ways to have a beneficial effect on the environment; go into schools and get kids to hassle their parents
- Motivate people to change, e.g. give an economic reason to save energy (raise prices, tax ‘bad’ behaviour e.g. travel)
- Start small and find cheap ways to trigger change e.g. by changing the default
- Create saving representations
- Use social pressure, reputation, image motivation and pride to give people reason to care, provide mutual feedback, measure and evaluate each other
- Principles of BE are universal. What works where depends on the context and needs to be researched and evaluated
What does Systems-Thinking suggest to balance our global socio-economic system?
- Map complexity and dynamics as well as possible
- Approach problems in multiple ways and be clear about the goals
- Enable change from within the system: start with thinking and practice, streamline actions based on what works
If you are interested in our unique Thinkpanel approach please to not hesitate to
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