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Goal setting and energy conservation

Matthew Harding () and Alice Hsiaw ()

Journal of Economic Behavior & Organization, 2014, vol. 107, issue PA, 209-227

Abstract: This paper develops a theoretical model of consumer demand for an energy conservation program that involves non-binding, self-set goals. We present evidence from a Northern Illinois goal-setting program, aimed at reducing residential electricity consumption, which is difficult to reconcile with standard preferences and is broadly consistent with a model of present-biased consumers with reference-dependent preferences. We find that the need for commitment is correlated with program adoption, higher pre-adoption consumption, and lower responsiveness to goals. Consumers choosing realistic goals persistently save substantially more, achieving savings of nearly 11%, than those choosing very low or unrealistically high goals.

Keywords: Goal-setting; Reference dependence; Self-control; Energy conservation (search for similar items in EconPapers)
JEL-codes: D03 D12 D91 L94 Q41 Q50 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.jebo.2014.04.012

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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Handle: RePEc:eee:jeborg:v:107:y:2014:i:pa:p:209-227