STUDY | 
Environment
 BEHAVIOR CHANGE

Knowledge is (Less) Power.

Jessoe & Rapson (2012)
Katrina Jessoe,David Rapson
Summary by 
Mark Egan

A RCT looked a situation where residential electricity customers saw price increases, with households in the treatment group receiving high-frequency information displays that give information about usage and prices. This lowering of information acquisition costs allows identification of the marginal information effect. Households only experiencing price increases reduce demand by 0-7% whereas those also exposed to information feedback reduce by 8-22%, depending on the amount of advance notice.

Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, lowcost information. We use a randomized control trial to test the effect of high-frequency information about residential electricity usage on the price elasticity of demand. Informed households are three standard deviations more responsive to temporary price increases, an effect that is not attributable to price salience. Conservation extends beyond pricing events in the short and medium run, providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement. Survey evidence suggests that information facilitates learning.