At a green venture capital conference in Boston last week, a panelist made a point about the challenges of selling energy efficiency services and products in the residential market.
He said the Shelton Group, often quoted on this site for its studies of green consumer attitudes, found that people, on average, would not take steps to increase the energy efficiency on their homes until they paid $129 more a month in utility bills.
That’s no typo—it’s $129 a month! It’s shocking that people would waste that much money. Much of this may be a matter of context, however. On her blog post about this, the Shelton Group’s Suzanne Shelton went on to say, “They didn’t come right out and tell us they were willing to waste $4/day – that’s just how the math works out. We think most consumers would likely feel pretty financially irresponsible/stupid if informed of the numbers above – after all, $1,500 [a year] is nothing to sneeze at, even if you make $100,000 a year.”
I hope people would feel foolish by wasting that kind of ching.
But there are likely even more factors at work here. As Shelton writes:
We think [this “Apathy Gap”] is caused by concern over out of pocket expense and prioritzation. Consumer spending trends are down, savings trends are up and repaying debt continues to be a concern in most households. Ultimately, most U.S. households have limited discretionary dollars for major purchases and many are more focused on saving and trying to pay off what they’ve already financed than taking on new purchases. Thus, they’re willing to keep the status quo and pay their monthly utility bill, as it’s currently built into their monthly budget – even knowing the bill could be reduced with energy efficient home improvements.
That’s entirely logical, but it may not be the primary reason for our energy efficiency inertia. In Harvard psychologist Daniel Gilbert’s very readable book, Stumbling on Happiness (Alfred A. Knopf, 2006), the author explains the many and sundry ways we convince ourselves to make extremely poor decisions. According to Gilbert, inaction (such as not equipping your home with energy-efficiencies, for example) can result from our expectations. People think they will regret foolish actions more than foolish inactions, so they do nothing. Why is this? Gilbert says our psychological immune system has a more difficult time manufacturing positive and credible views of our inactions than of our actions.
That makes sense, too. We sometimes need to be reasoned and cajoled out of our inertia.
Is it relative?
Plus, energy costs represent a smaller percentage of income for the higher income households that could best afford improvements. Reducing energy bills isn’t a priority for many of them.
So it’s also a matter of relativity? It could be same reason, as Gilbert cites in his book, that people will drive across town to save $50 on a $100 radio, but not $50 on car. When we’re buying something more expensive, $50 doesn’t seem like it’s worth much effort. Even though $50 is still $50, no matter the cost of purchase.
All those nabobs of negativism
“So how do you make [energy efficiency] a higher priority? We think it’s about making consumers aware of the waste,” Shelton says.
As reported in this space, the “don’t waste” message seems to register better among consumers these days than “save energy.” That may well be a result of our struggling economy. But after reading Gilbert’s insightful book on the psychology of happiness, I suspect there could be another answer.
According to Gilbert, economists and psychologists have shown that people expect losing a dollar will have more impact than gaining one. And most of us will refuse a bet that gives us an 85 percent chance of doubling our life savings, for fear of the 15 percent chance of losing it.
In other words, we’re a bunch of negative nabobs! Maybe that’s why negative campaign advertising works so well. It preys on our fears.
Will I regret writing this?
All this negativity seems to contradict the aforementioned assertion that we expect to regret our foolish actions more than our foolish inactions. After all, taking action seems a much more positive step than not taking action. Though I didn’t tell you all of that story: We’re wrong about our expectations of regret. As Gilbert relays in his book, as we go through life we tend to regret our inactions more than our actions.
Arrrrrggh! Darn those confusing psychologists!
But think about it: There could be a way to sell people energy-efficient products in all of this. Should we hint that people could someday regret not having energy-efficient technologies in their homes? I’ll leave that up to your sales skills.