Spillovers from Behavioral Interventions: Experimental Evidence from Water and Energy Use

This paper provides experimental evidence that behavioral interventions spill over to untreated sectors by altering consumer choice. We use a randomized controlled trial and high-frequency data to test the eect of social norms messaging about residential water use on electricity consumption. Messaging induces a 1.3 to 2.2% reduction in summertime electricity use. Empirical tests and household survey data support the hypothesis that this nudge alters electricity choices. An engineering simulation suggests that complementarities between appliances that use water and electricity can explain only 26% of the electricity reduction. Incorporating the cross-sectoral spillover increases the cost-eectiveness of the intervention by 62%

Utilities Included: Split Incentives in Commercial Electricity Contracts

The largest decile of commercial electricity customers comprises half of commercial sector electricity usage. We quantify a substantial split incentives problem that exists when these large firms are on electricity-included property lease contracts. Using exogenous variation in weather shocks, we show that customers on tenant-paid contracts use 6-14% less electricity in summer months. The policy implications are promising. Nationwide energy savings from aligning incentives for the largest 10% of commercial customers exceeds analogous savings from the entire residential electricity sector. It is also cost-effective: switching to tenant-paid contracts via sub-metering has a private payoff period of under one year

Utilities Included: Split Incentives in Commercial Electricity Contracts

This paper quantifies a tenant-side “split incentives” problem that exists when the largest commercial sector customers are on electricity-included property lease contracts causing them to face a marginal electricity price of zero. We use exogenous variation in weather shocks to show that the largest firms on tenant-paid contracts use up to 14 percent less electricity in response to summer temperature fluctuations. The result is retrieved under weaker identifying assumptions than previous split incentives papers, and is robust when exposed to several opportunities to fail. The electricity reduction in response to temperature increases is likely to be a lower bound when generalized nationwide and suggests that policymakers should consider a sub-metering policy to expose the largest commercial tenants to the prevailing retail electricity price