IEEE Power & Energy Magazine - January/February 2018 - 46

therefore lead to less energy savings overall than other types
of interventions having the same direct effect on behavior.
hence, highlighting monetary benefits when promoting
energy savings may backfire, especially among pro-environmental consumers. monetary incentives lack the spillover
effect on other energy-saving behaviors that other interventions may have. Therefore, monetary incentives need to be
large enough to overcome this reduced intrinsic motivation.
in summary, although monetary incentives can be an effective means to reduce carbon emissions by reducing household
fossil-energy use, they are often not cost-effective. To have any
effect at all, the incentive needs to be large enough to justify the
effort and other costs of engaging in the behavior. as energy
costs are currently too low to significantly deter consumption,
substantial monetary incentives need to be added to make costbenefit analyses lead to fossil-energy savings. also, the incentive needs to be large enough to more than compensate for any
reduction in intrinsic motivation, which may be crowded out
by the incentive. Further, incentives need to be provided for all
behaviors one aims to encourage, as incentivized behaviors are
not likely to lead to spillover effects. Finally, if the monetary
incentive leads to more money in the hands of consumers, some
of the energy savings may be eaten up by rebound effects created by the spending of this money.

Incentives to Reduce
Household Fossil-Energy Use

Energy Conserved (%)

in the light of the possible downsides of using monetary
incentives, a crucial question is if and how interventions can
be designed to more effectively reduce household fossil-energy
use. We will discuss three possible routes. First, we consider

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8
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4
2
0
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-4
-6
-8

5 6 7
Baseline

Public Social
Public Monetary
Control

9 10 11

Private Social
Private Monetary

figure 4. The percentages of energy saved per week for
groups receiving monetary or social rewards (H. J. Handgraaf, M.A. V. L. de Jeude, and K. C. Appelt, (2013). "Public
praise versus. private pay: Effects of rewards on energy
conservation in the workplace," Ecological Economics, vol.
86, pp. 86-92, 2013, used with permission.)
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ieee power & energy magazine

other strategies that may be more effective than monetary
incentives to reduce household fossil-energy use. Second,
we discuss ways to implement monetary incentives that may
increase, rather than decrease, the receiver's intrinsic motivation to engage in sustainable energy behaviors. Third, we discuss research on the use of temporary monetary incentives as
a means to change people's habits, thereby promoting a change
in behavior in the long run.

Other strategies
monetary incentives are only one among several proven strategies to promote sustainable energy behaviors. although there
is clearly no "silver bullet," there are other strategies that may
effectively reduce emissions by reducing household fossilenergy use under some circumstances. one such strategy is
energy audits, which have proven effective at promoting energy
saving, provided people accept the offer. energy audits involve
giving people tailored information regarding which changes
in energy behaviors are relevant for the specific household, in
person. The achilles' heel of such strategies is to get people
to accept the offer of an energy audit; when they do, energy
audits are effective both because the conveyed energy-saving
tips are personally relevant and because of the personal contact.
in particular, research shows that people are more likely to act
on information when it comes from someone they know or like.
as noted previously, environmental motives are often the
reason that people perform both efficiency and curtailment
behaviors. in contrast to small monetary savings, small environmental savings have been found to be perceived as worth
the effort. highlighting environmental benefits of reducing
fossil-energy use tends to reinforce rather than decrease
intrinsic motivation. Therefore, providing environmental arguments, for example by stressing co2 reductions, can sometimes effectively reduce fossil-energy use without the need
for monetary incentives.
Social rewards have been found to sometimes motivate the
reduction of fossil-energy use. Social rewards can, for example, involve recognition or praise by others for a consumer's
reduced usage. The effectiveness of social rewards can be
illustrated by a quasi-experimental study, which assigned
employees to receive weekly monetary or social rewards for
saving energy at work. The weekly monetary reward was
between €0 and €5, and the weekly social reward was a grade
between five and ten, depending on the energy saved. half of
the participants learned about their weekly reward in a private announcement, while the other half received it in a public
announcement. The participants receiving (public or private)
social rewards reduced their energy use, while the participants
receiving (public or private) monetary rewards did not reduce
their energy use compared to a control group (see Figure 4).
Social norm communication has also been used to reduce
household fossil-energy use (see also Jans et al. this issue).
Social norm communication provides information about the
energy behavior of neighbors or other people. Social norm
communication can be effective because people tend to be
january/february 2018

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - January/February 2018