Information acquisition and residential electricity consumption: Evidence from a field experiment

Abstract

This article uses hourly data on household usage of an in-home display (IHD) in a randomized field experiment to investigate how acquiring information from IHDs affects electricity usage of households. Providing IHDs, which enables households to see a graph of their half-hourly electricity consumption in real time, is a promising policy intervention that corrects for biases associated with inattention and limited information-processing capacity by promoting salience and learning. The immediate effect of providing an IHD is heightened household attention to information on consumption, and the repetition of attention is expected to improve households’ capacity to process information.The estimation results of a simultaneous equation model with discrete choice of hourly IHD usage and continuous hourly consumption of electricity of 501 households living in a southern area of Kyoto, Japan, over 36 days in summer 2012 provide evidence on the effects of real-time information feedback over time. The cumulative usage of IHDs reduced hourly electricity consumption of “energy-using” households whose electricity consumption before the experiment had been far higher than other households. Contrary to the energy-conservation literature, the cumulative usage of IHDs raised electricity consumption of “energy-saving” households whose electricity consumption had been relatively modest before the experiment. This may be due to a “boomerang effect,” which raised electricity usage of well-informed households whose electricity saving had exceeded the optimal saving before obtaining information about their actual usage.