Household reduction of gas consumption in the energy crisis is not explained by individual economic incentives

Markus Dertwinkel-Kalt (), Christoph Feldhaus, Axel Ockenfels and Matthias Sutter
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Markus Dertwinkel-Kalt: b Experimental Economics Group, Max Planck Institute for Research on Collective Goods Bonn , Bonn 53113 , Germany
Christoph Feldhaus: c Faculty of Management and Economics, Ruhr-University Bochum , Bochum 44801 , Germany

Proceedings of the National Academy of Sciences, 2024, vol. 121, issue 48, e2411740121

Abstract:

In response to the disruption of gas supplies from Russia following the invasion of Ukraine in 2022, European politicians and public utilities appealed to citizens and customers to conserve natural gas. Moreover, they strengthened economic incentives for gas conservation. In fact, a substantial amount of natural gas was saved during the winter of 2022/23. This raises the question to what extent this success is attributable to government and corporate means to foster energy conservation in the crisis, including energy policies such as the German government’s “gas price brake,†gas-saving programs launched by public utilities, and consumers’ individual pricing schemes. We analyzed the effectiveness of these means using a survey and a field experiment with a German gas supplier and show that, while household savings during the crisis were substantial, economic incentives did not significantly change behavior. Indeed, demand for gas is largely price inelastic. A large majority of consumers do not understand the incentives arising from the gas price brake, and when they do, they do not respond. Likewise, consumers do not react to the design of the utilities’ gas-saving program. These findings suggest that i) citizens’ response to marginal individual economic incentives contributes little to overall gas savings, and ii) the crisis, along with the extensive societal engagement it generated, likely shifted the public’s mindset about energy consumption, making conservation a social priority.

Keywords: energy policy; energy crisis; gas price brake (search for similar items in EconPapers)
Date: 2024
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