Allcott and Rogers NBER WP - The Short-Run and Long-Run Effects of Behavioral Interventions

NBER WORKING PAPER SERIES

THE SHORT-RUN AND LONG-RUN EFFECTS OF BEHAVIORAL INTERVENTIONS:EXPERIMENTAL EVIDENCE FROM ENERGY CONSERVATION

Hunt AllcottTodd Rogers

Working Paper 18492http://www.nber.org/papers/w18492

NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts Avenue

Cambridge, MA 02138October 2012

We thank Ken Agnew, David Cesarini, Gary Charness, Paul Cheshire, Lucas Davis, Stefano DellaVigna,Xavier Gabaix, Francesca Gino, Uri Gneezy, Michael Greenstone, Judd Kessler, David Laibson, KatyMilkman, Sendhil Mullainathan, Karen Palmer, Charlie Sprenger, staff at the utilities we study, anda number of seminar participants for feedback and helpful conversations. Thanks also to Tyler Curtis,Lisa Danz, Rachel Gold, Arkadi Gerney, Marc Laitin, Laura Lewellyn, Elena Washington, and manyothers at Opower for sharing data and insight with us. We are grateful to the Sloan Foundation forfinancial support of our research on the economics of energy efficiency. Stata code for replicatingthe analysis is available from Hunt Allcott's website. The views expressed herein are those of theauthors and do not necessarily reflect the views of the National Bureau of Economic Research.

NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies officialNBER publications.

© 2012 by Hunt Allcott and Todd Rogers. All rights reserved. Short sections of text, not to exceedtwo paragraphs, may be quoted without explicit permission provided that full credit, including © notice,is given to the source.

The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidencefrom Energy ConservationHunt Allcott and Todd RogersNBER Working Paper No. 18492October 2012, Revised September 2013JEL No. D03,D11,L97,Q41

ABSTRACT

While interventions to affect smoking, exercise, and other behaviors sometimes have short-run impacts,there is limited evidence on long-run effects. We study the three longest-running sites of the Opower energyconservation program, in which home energy reports with social comparisons and energy conservationtips are repeatedly mailed to more than six million households nationwide. At first, there is a pattern of"action and backsliding": the reports cue immediate conservation, but consumers' initial efforts begin todecay within less than two weeks. As more reports are delivered, this high-frequency cycling attenuates.In the long-run, consumers form a new stock of physical capital or consumption habits: if reports arediscontinued after two years, the effects are much more persistent than they had been between theinitial reports. Remarkably, however, consumers do not fully habituate: they still respond substantiallyif treatment is continued after two years. We show that the previous conservative assumptions aboutlong-run persistence had dramatically understated cost effectiveness, and we illustrate how estimatesof persistence and habituation can be used to optimize program design.

Hunt AllcottDepartment of EconomicsNew York University19 W. 4th Street, 6th FloorNew York, NY 10012and [email protected]

Todd RogersHarvard Kennedy [email protected]