Understanding the financial incentive conundrum: A meta-analysis of the effectiveness of financial incentive interventions in promoting energy conservation behavior

Daniel Sloot and Benjamin Scheibehenne

Renewable and Sustainable Energy Reviews, 2022, vol. 168, issue C

Abstract: Household energy conservation plays an important role in the mitigation of greenhouse gas emissions and the transition towards a sustainable energy system. Financial incentives have been a popular intervention to facilitate lowering one's electricity consumption, and they have been used to target both overall conservation and conservation at specific times of high demand, also referred to as peak consumption. However, recent findings are ambiguous with regard to the effectiveness of financial incentives, and research has thus far not clearly disentangled the effects of incentives on overall and peak consumption. This study provides meta-analytic evidence on the effectiveness of financial incentive interventions and uses meta-regression techniques to systematically evaluate differences in incentive characteristics and the contexts in which they are implemented. Using data from 72 studies (with 111 observations that include data from over 400,000 households), we compare the effects of financial information and actual incentives (e.g., pricing) on overall and peak electricity conservation. Financial incentives lead to a small decrease in overall consumption −1.83%) and a larger decrease in peak consumption (−10.00%), and effects of financial information are smaller compared to effects of actual incentives. Moreover, we find heterogeneous effects that can be further explained by differences in incentive types, characteristics, enhancing technologies, and study-level characteristics. We discuss theoretical as well as policy implications arising from these findings.

Keywords: Meta-analysis; Financial incentives; Energy conservation; Demand response; Demand-side management; Dynamic pricing (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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DOI: 10.1016/j.rser.2022.112761

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