During an after-dinner conversation with some friends a heated conversation came up regarding the next question. Why do we keep avoiding energy efficient light bulbs?
t’s a fact that technology has gradually allowed us to dispose the old 100-watt bulbs for ultra efficient light bulbs that consume 5 or even less watts. And it´s also a fact that it does not take any complex calculations to realise that led bulbs save an incredible amount of energy compared to conventional bulbs or compact fluorescent lamps (CFLs). This should then facilitate the decision to buy LED or other energy efficient light bulbs; surely most people would agree in buying a LED bulb over any other options. But why is it that when we are in front of the shelf, facing 3 different bulb options we tend to keep away from buying the energy efficient bulbs?
t’s a fact that technology has gradually allowed us to dispose the old 100-watt bulbs for ultra efficient light bulbs that consume 5 or even less watts. And it´s also a fact that it does not take any complex calculations to realise that led bulbs save an incredible amount of energy compared to conventional bulbs or compact fluorescent lamps (CFLs). This should then facilitate the decision to buy LED or other energy efficient light bulbs; surely most people would agree in buying a LED bulb over any other options. But why is it that when we are in front of the shelf, facing 3 different bulb options we tend to keep away from buying the energy efficient bulbs?
Even though the benefits of LED bulbs are evident, a very curious phenomenon is involved. When the purchasing decision is taken from the table at the after-dinner conversation to an actual shelf at the Home Depot, price at face value over-powers our willingness to invest and save in future consumption even though we know that LED bulbs are good investments that will help us save.
What is happening then? There are 2 things that are happening here that build a barrier for us to go into the consumption of energy efficient light bulbs. First, electricity is not like most of the consumption goods; electricity is an abstract good that we can’t touch or feel, and that we consume in such a natural way that for the majority it becomes a hidden cost. We know we have to pay forelectricity, but we’ve never seen it or felt it (hopefully), and because of this it is something that we cannot really quantify. How are we supposed to compare the difference between 7 and 100 watts? We definitely know 7 is way less than 100… but what does this watt reduction really mean in cash? When we’re facing 3 different bulbs, 7 watts and 100 watts is a relatively intangible difference that won't (momentarily) justify spending 10 times more, at face value, for a bulb. Not because it doesn’t deliver enough value, but simply because we can’t really identify the actual value that a 7-watt bulb that is pricier than a 100-bulb delivers in the long term.
Remember that we all think positively and are overconfident about the future! This is why, in an after-dinner conversation it’s a good idea to buy a LED bulb, as we are investing money to save in our future electricity bills. Never the less, in the present when we are in front of the shelf we don’t do it because paying ten times more for a bulb seems way too much. This is exasperated when we are going to save in something that we can’t really feel or measure accurately.
What can we do to beat this irrational act without spending tons of money in consciousness campaigns about the excessive use of energy as governments tend to do? The easiest way to make consumers overcome the irrationality of leaning towards the inefficient light bulbs, is to make energy a tangible good for consumers. Meaning that when Irrational Cosi is facing the light-bulbs shelf, the difference between 7 and 100 watts is something he can understand, compare and that allows him to perceive the actual money he can potentially save in the future. Making electricity something understandable and easily quantifiable (in $) for Irrational Cosi will create an incentive to spend ten times more today and save even more tomorrow.
Our collegues from the Danish Nudging Network published an study focused on increasing the sales of energy-efficient washing machines in Norway. To achieve it they simply added a sticker informing about the long-term impact that the machine would have in the electricity bills of consumers. This made energy-efficient washing machines more economically attractive even though they were more expensive at face value than other conventional washing machines.
If Irrational Cosi could easily see the cost of a LED bulb at $0.07 per hour and the cost of a 100-watt bulb at $1.00 per hour, do you think Cosi would still be Irrational and buy conventional 100-watt bulbs?
What is happening then? There are 2 things that are happening here that build a barrier for us to go into the consumption of energy efficient light bulbs. First, electricity is not like most of the consumption goods; electricity is an abstract good that we can’t touch or feel, and that we consume in such a natural way that for the majority it becomes a hidden cost. We know we have to pay forelectricity, but we’ve never seen it or felt it (hopefully), and because of this it is something that we cannot really quantify. How are we supposed to compare the difference between 7 and 100 watts? We definitely know 7 is way less than 100… but what does this watt reduction really mean in cash? When we’re facing 3 different bulbs, 7 watts and 100 watts is a relatively intangible difference that won't (momentarily) justify spending 10 times more, at face value, for a bulb. Not because it doesn’t deliver enough value, but simply because we can’t really identify the actual value that a 7-watt bulb that is pricier than a 100-bulb delivers in the long term.
Remember that we all think positively and are overconfident about the future! This is why, in an after-dinner conversation it’s a good idea to buy a LED bulb, as we are investing money to save in our future electricity bills. Never the less, in the present when we are in front of the shelf we don’t do it because paying ten times more for a bulb seems way too much. This is exasperated when we are going to save in something that we can’t really feel or measure accurately.
What can we do to beat this irrational act without spending tons of money in consciousness campaigns about the excessive use of energy as governments tend to do? The easiest way to make consumers overcome the irrationality of leaning towards the inefficient light bulbs, is to make energy a tangible good for consumers. Meaning that when Irrational Cosi is facing the light-bulbs shelf, the difference between 7 and 100 watts is something he can understand, compare and that allows him to perceive the actual money he can potentially save in the future. Making electricity something understandable and easily quantifiable (in $) for Irrational Cosi will create an incentive to spend ten times more today and save even more tomorrow.
Our collegues from the Danish Nudging Network published an study focused on increasing the sales of energy-efficient washing machines in Norway. To achieve it they simply added a sticker informing about the long-term impact that the machine would have in the electricity bills of consumers. This made energy-efficient washing machines more economically attractive even though they were more expensive at face value than other conventional washing machines.
If Irrational Cosi could easily see the cost of a LED bulb at $0.07 per hour and the cost of a 100-watt bulb at $1.00 per hour, do you think Cosi would still be Irrational and buy conventional 100-watt bulbs?