Help people keep a commitment to conservation
Progress fighting climate change requires action by large numbers of people. That’s why funding advocacy for regulatory changes is popular. Let’s be honest though, even $10 million isn’t likely to be noticed among the vast 
sums being spent by many others. There’s an alternative that can make a difference more rapidly and far more cheaply than investing in advocacy.
Conservation is one of the lowest-cost, highest-impact potential approaches to reducing greenhouse gas emissions. Electricity is responsible for 40 per cent of GHG emissions in the US and 30 per cent of GHG emissions in Europe. Those figures, and the amount of electricity used by consumers, are rising in both regions. Cutting power consumption would not only reduce current emissions but also reduce the use of highly carbon-inefficient ‘peak load’ power plants and the need to construct new coal power plants.
But historically, encouraging conservation has been an ineffective strategy. Relatively few people, despite their best intentions, actively conserve power and even fewer permanently reduce power consumption. This isn’t a new problem. But we now have good evidence for how to solve it.
In short, with a budget of just $10 million, a foundation could help millions of individuals to start reducing energy consumption and stick to a plan to reduce consumption over the long-term.
How? By taking a two-pronged approach: first, by investing in tools that have already shown significant promise in helping people to take actions they say want to but have a hard time beginning and sticking to; second, by ensuring that such investments allow for learning, so that future funds get allocated effectively.
There are three ‘truths’ about most people. We say we want to do things. But we don’t do them. And we later regret not having done them. Why is this? People have a hard time taking actions where the cost is incurred in the short term but the benefits come in the long term. This is particularly true when the long-term benefit is hard to visualize, as is the case for climate change. Think of how hard it is to start a diet, begin an exercise regime, quit smoking or save for a rainy day. In all of these cases, we have to sacrifice today for benefits tomorrow. Turning off the lights or replacing incandescent bulbs or inefficient appliances requires doing something inconvenient or costly now for an uncertain long-term payoff.
But this standard human behaviour pattern can be changed relatively easily by giving people real-time feedback that allows them to see and understand the long-term costs immediately, and giving individuals a mechanism to commit to future actions. We’ve learned this from successful experiments helping people lose weight and quit smoking.
In the last few years we’ve seen the invention of real-time meters for electricity use. In limited tests of real-time electricity meters, power usage fell by an average of 40 per cent. Learning whether real-time meters have such strong effects across the population, and how to deploy meters for maximum effect, is a crucial next step – the best way to do that is via randomized controlled trials. Unequivocally proving (or disproving, thereby saving future wasted efforts) the effectiveness of real-time meters in several countries would cost just $1.5 million.
Real-time meters show evidence of helping people take action in the short-term, but a second problem emerges – maintaining the initial gains. After all, conservation requires changing behaviour patterns over the long-term.
Another tool holds promise for solving this problem: commitment contracts. A commitment contract allows individuals to pledge to fulfill a specific goal and impose a cost on themselves if they fail. For instance, a person could pledge $100 that they would lose 10 pounds in three months. If they meet the goal, the individual gets their $100 back. If not, the $100 is forfeited. In terms of energy conservation, commitment contracts could include replacing inefficient light bulbs or appliances, or reducing the amount of electricity consumed each month compared to the prior year. Using real-time consumption meters would make commitment contracts that much easier to implement.
Part of the beauty of commitment contracts is that they require no external funding –incentives and penalties are funded by the participants. Forfeited funds can even be used to provide additional positive incentives to those who succeed. They are therefore an extremely promising approach to helping people alter their behaviour in ways beneficial to everyone.
Testing commitment contracts for reducing energy consumption could be done at a similarly low cost: $1.5 million. Scaling a successful test would be even cheaper.
These tools also have the huge advantage of built-in measurement. Real-time meters provide on-going information on conservation. Commitment contracts have metrics built in as well by their nature – contracts specify objective measures of energy conservation and success in reaching goals.
With data proving the effectiveness of real-time meters and commitment contracts, the remaining funds in the $10 million budget could be used to accelerate deployment of these two tools. For instance, $4 million could be used to provide incentives, such as public lotteries, to generate excitement about real-time meters, $1 million could be used to publicize commitment contracts, and $2 million could be set as a prize for the development of cheaper self-installed real-time meters.
This plan of action would probably have many knock-on effects by leveraging other funders. Data proving the effectiveness of these programmes would lead other funders to invest in expanding them. Social norming – the fact that our peers strongly influence our behaviour – is a natural complement to commitment contracts. As more people take concrete action to conserve energy using these tools, others will follow their lead, perhaps without even needing the tools. You have a self-reinforcing cycle to dramatically cut energy usage on a very small budget.
Ultimately, the key to this approach is an investment in learning what works. While it’s important to deploy tools likely to work, like real-time meters and commitment contracts, testing their effectiveness is the big win. Using $10 million learning what works will help us invest the next $10 billion in fighting climate change wisely.
Tim Ogden is editor-in-chief of Philanthropy Action and an executive partner of Sona Partners. Dean Karlan is professor of economics at Yale University, co-founder of stickK.com and president of Innovations for Poverty Action. Email timothy.ogden@philanthropyaction.com or dean.karlan@yale.edu
