Maintenance

High prices force consumers to reduce their electricity usage and quickly, according to new research from Stanford and the University of Pennsylvania.

The study by Matthew White and Peter C. Reiss, published in RAND Journal of Economics, looked at the behaviour of thousands of households in California.

When electricity prices doubled in 2000, households cut their electricity usage by 13% within 60 days. Over a third of households reduced their electricity consumption by over 20%.

However, when electricity prices dropped again consumers’ use of electricity rose to previous levels within a month.

But the researchers also found that campaigns promoting energy efficiency are effective. Public information programmes in California have reduced household energy use by around 7%.

“It is clear that the typical household is willing and able to reduce its energy consumption by meaningful amounts when prices change and when given useful, specific information on how to do so,” say the authors.

For further information:
Peter C. Reiss and Matthew W. White. What changes energy consumption? Prices and public pressures. The RAND Journal of Economics (2008) 39 (3), 636-663