Information Strategies for energy conservation: A

field experiment in India

Energy Economics
Victor L. Chen, Magali A. Delmas, Stephen L. Locke, Amarjeet Singh

Team Letter: A
Team Liger: Poh Kah Siang, Matthew Tee, Ferdinand Lim, Kit-hann Low & Bernie Tan
 Presentation Flow

1. Background
2. Research Design
3. Main Empirical Findings
4. Results and Discussion
5. Addition Details
6. Question and Answer
 01
Background
Key Findings and the importance
of this experiment
 Background

Little is known about the effectiveness of information strategies on

energy conservation in developing countries.

A field experiment is carried out in an apartment complex in India.

Test how information about electricity usage impacts the

electricity consumption of urban middle class households.
 Quick Poll
Do you think that money is the main motivation behind
energy conservation?
 Key Findings

Non-monetary messages that framed the electricity consumption in terms of

environmental and health impacts were very effective in promoting energy
conservation. (Moral payoffs strategy)

Monetary messages were not as effective as it was meant to be. (Pecuniary

Strategy)

These findings contrasted the survey result obtained from urban indians
who say that money of all the factors(health, environment and etc) is the
main motivation for energy conservation.
 Pecuniary Strategy

- Monetary incentives to motivate individuals to conserve.

- An effective pecuniary strategy informs participant about about their

financial expenses and potential savings.

- Might crowd out altruism and prosocial motivation. (Counterproductive)

- Strategy might be ineffective if monetary incentive is small.

 Moral Payoff Strategy

- Leverage on ethical and moral dilemmas to motivate individuals to

conserve.

- Research has shown that people are more careful with their consumption

if they know their actions could affect others.

- An effective execution of this strategy creates a long lasting effect .

 Why the need for this experiment?

According to the International Energy Agency, electricity and heat

generation accounts for over 40% of greenhouse gases across the world.

In the coming decade, the majority of the energy demand will come from
the developing world.

Mitigate the impact of greenhouse gas emission and promote

environmental improvements in other developing countries.
Environmental Kuznets Curve
 Consequences

In 2019, air pollution accounts for 1.67 million deaths in India. To put things into
perspective, 17.8% of all deaths in India were caused by air pollution.

**Approximately 1 in every 5 deaths is related to air pollution.

 Developed Vs Developing World
Results obtained from developed world cannot be used in developing
countries

- Income ($ vs $$$)

- Education levels

- Information technology infrastructure

These differences will yield different results, hence, strategies cannot be

used interchangeably.
 Reason for picking India

- India has emerged as one of the fastest growing economies of the world

- This usually entails a rapid increase in energy consumption.

- The middle class population of India is estimated to double to 547 million by

2026.

- Estimated electricity consumption showing an annual increase of 9% yearly

since 2006.
 02
Research Design
Finding the Treatment Effect of the
Energy Feedback Messages
 Research Design

Monetary Group Health Group Control Group

Given information on
Given information on their
their energy Did not receive any
energy consumption with
consumption with feedback messages
regards to air pollution
regards to spending

treatment groups
 Several important characteristics

Residents pay their own electricity bills

01 results are representative of outcomes of real-life consumption decisions in their
natural settings

Apartments are standardized with the same size and layout

02 helps to control for differences in infrastructure to isolate energy use behaviour

Installation of an energy monitoring system

03 this system would record and process electricity usage, also distributing this
information to participants on a web-based dashboard
 The Participants
Each apartment has
3 bedrooms, 3 bathrooms,
is around ~1700 sq. ft.

68% 100%
The typical apartment includes:

Of 28 households, 19 Data was collected for

(68%) agreed to all apartments in the
participate complex
 The Participants

Average Household Income Average Monthly Electric Bill

~125000-170000 Rupees per month ~1551 Rupees per month

The Dashboard
 The Treatment Messages

Monetary Message

“Last week you used 20% more electricity than your efficient
neighbours. You spend ₹1820 more over one year.”

Health Message

“Last week you used 20% more electricity than your efficient neighbours.
Over one year, you are adding 195 kg of pollutants which contribute to health
impacts such as childhood asthma and cancer.”
 Econometric Specification

Data was collected

over 9 months

Yit is a difference-in-
Generalized Least Squares (GLS) is a
differences specification technique for estimating unknown
parameters in a linear regression model
 Econometric Specification

Yit – electricity usage for apartment i at time t (outcome)

 Econometric Specification

Yit – electricity usage for apartment i at time t (outcome)

β – coefficients of interest
 Econometric Specification

Yit – electricity usage for apartment i at time t (outcome) Dummy variables only take values

β – coefficients of interest 0 or 1 to indicate the absence or

presence of some categorical effect
Postt – a dummy variable, equals 1 for observations after treatment started
 Econometric Specification

Yit – electricity usage for apartment i at time t (outcome) Dummy variables only take values

β – coefficients of interest 0 or 1 to indicate the absence or

presence of some categorical effect
Postt – a dummy variable, equals 1 for observations after treatment started

healthi / financiali – dummy variables indicating treatment group

 Econometric Specification

Yit – electricity usage for apartment i at time t (outcome)

β – coefficients of interest
Postt – a dummy variable, equals 1 for observations after treatment started

healthi / financiali – dummy variables indicating treatment group

αi – represents household-specific fixed effects

 Econometric Specification

Yit – electricity usage for apartment i at time t (outcome)

β – coefficients of interest
Postt – a dummy variable, equals 1 for observations after treatment started

healthi / financiali – dummy variables indicating treatment group

αi – represents household-specific fixed effects

γt – includes a cubic time trend as well as day-of-week and hour-of-day dummy variables.

εit – the error term and accounts for auto-correlated errors within household.
 Average Treatment Effect

where Y measures average electricity usage for the treatment and

control groups pre- and post-treatment

A negative ATE would indicate that the reduction in electricity usage for the treatment group is larger
than any reduction in electricity usage for the control group.
 03
Main Empirical Findings
 15-min
readings will be used as a dependant variable
 Cumulative average treatment effect
Average treatment effect is +ve

Average treatment effect about 0

Average treatment effect -VE

 Average treatment effect

POSITIVE NEGATIVE

Consume more/ save LESS Consume less/ save MORE

electricity electricity
Summary of Econometric Specification Findings

Health group Financial group

FALL in electricity
Insignificant effect
consumption
Correlation between treatment and participant
engagement

01 02

Level of engagement Impact of engagement

 Methods

Emails
Measure no. of weekly
emails that were opened
Level of
engagement

Dashboard

Measure no. of dashboard

views
 Emails opened

Least engaged in health group Least engaged in financial group

 Dashboard views

No. of times most engaged in health

group viewed their dashboard

No. of times most engaged in financial

group viewed their dashboard
IMPACT OF ENGAGEMENT(email)
IMPACT OF ENGAGEMENT (eMail)

Avg. treatment effect

for financial group is
+1.05% larger relative to
control group

Avg. treatment effect

for health group is -
4.67% larger relative to
control group
IMPACT OF ENGAGEMENT (Dashboard)
IMPACT OF ENGAGEMENT (Dashboard)

Avg. treatment effect is

+1.14% for financial group
relative to control group

Avg. treatment effect is -

1.55% for health group
relative to control group
 Overall findings

Health group Financial group

Each additional email opened and Each additional email opened and
dashboard viewed resulted in lower dashboard viewed resulted in
electrical consumption higher electrical consumption
 04
Results and Discussion
 Lessons Learnt
Firstly...

Control Group

Experienced electricity savings relative to the control

group.
&

Did not experience electricity savings relative to the

control group.
Opposite of the prediction...
 Opposite of the prediction...

Instead, it was more persistent when it is framed as an

environment and health-based community concern
 &

On average, households that received the

health/environmental messages reduced electricity
consumption by 15-18%
These results are consistent....
Asensio and Delmas, 2015,2016
- Electricity field experiment
conducted in LA
- Households who received the
health/environment messages
did reduce their electricity
consumption by 8% as
compared to the control group
- Those who received the
monetary messages did not
differ significantly from the
control group
These results are consistent....
Steinhorst et. al 2015 - Conducted in Germany
- Environmental framing lead
to high intention for
climate- friendly behaviour
- Monetary framing lead to
no difference with the
control group
Yet the insignificant results for the monetary
group were somewhat surprising...

- Households in the monetary group would have potential

savings of 327 Rupees per month if they reduced their
electricity consumption to the level of their efficient neighbor
IS THAT A SIGNIFICANT AMOUNT?
327 Rupees ≈ 2 gallons of milk / over 1 gallon of gasoline
 Savings were not sufficiently
large to motivate them or were
just not motivated by monetary
savings
 Low Energy Pricing

- Energy pricing in India has been kept relatively low to

promote spread of electricity especially in rural areas
- However, the results indicate that the monetary
savings were insufficient to drive conservation in
the context of our indian urban participants
 Context
- Raises questions whether the results can be generalized to the
rest of the population of a developing community
- Further studies should evaluate how these motivations vary
for different levels of income and education within developing
countries
 Lessons Learnt
Secondly…

The findings about the effectiveness of health

messages indicate the potential to use non-monetary
messages for urban middle class households in
developing countries
 Lack of knowledge

Much of the knowledge is

scattered No concerted efforts to
addressing the various aspects of
air pollution

Plugging the gaps in current

knowledge to the public
 Lessons Learnt
Thirdly…

This study is the first to show the importance of

household’s engagement with electricity
consumption data to understand conservation
behavior
 Different levels of engagement impacted
conservation behavior

- Households that were more engaged with the health/environmental

messages → reminded of the negative consequences of their electricity
consumption → conserved more than those less engaged

- Households that were more engaged with the monetary savings

messaged → reminded of how small the savings were from reducing
their consumption → consumed more than those less engaged
 Lessons Learnt
Fourthly...

We show a difference between what was stated in a

survey about conservations motivations and the
revealed behavior through the experiment
Fourthly...
- The experimental results from the research are more reliable than
stated motivations in the survey because the treatment strategy
included realistic monetary rewards and health consequences for the
participants (Harrison and List, 2004)
- Future research should focus on the difference in stated preferences
towards energy conservation behavior and observed actions in both
developed and developing countries .
 05
Additional Details
Ensuring Robustness of
Data
Strength of a Statistical model according to the specific
conditions of the statistical analysis a study hopes to achieve.
 Factor 1 Key Action 1
Missing Calculated in
Observations Regression

Potential
Inconsistencies

Factor 2 Key Action 2

Absentee Exit Survey
Household
 Econometric Specification

Yit – the log of electricity usage for apartment i at time t.

Postt – a dummy variable equal to one of for all observations after treatment messages started.

healthi / financiali – dummy variables indicating which treatment group to which each
household was assigned.
αi – represents household-specific fixed effects that account for any time-invariant household
specific effects.
γt – includes a cubic time trend as well as day-of-week and hour-of-day dummy variables.

εit – the error term and accounts for auto-correlated errors within household.
 Robustness Test
Dependent Variable: 15-min readings

GLS Method Clustered Standard Errors

Col 1 Col 2 Col 3 Col 4 Col 1 Col 2 Col 3

Original Used Omitted Included Original Dropped Dropped
Treatment week-FE day-of-the missing Treatment people who people
Effects instead of week and observations Effects did not read who had
cubic time hour-of- email different
trend day fixed (But with housing
effects CSE) conditions
 Robustness Test
Test Method: Clustered Standard Errors + HH Fixed Effects

in Dep Var: Differences:

1. No. of emails opened 1. Financial Group

2. No. of dashboard visits 2. Negligible

At 10% Significance
level, Experiment
remains Robust.
 Limitations

Data is subjective to Possible lack of

developing countries. independence of the
control group

Treatment Groups
 Limitations

Comparative
descriptors may result Small sample size, 28
in biased attempt for Households
energy conservation

Treatment Groups
Our Assessment of the Article
 p-val
ue

No major statistical discrepancies

with regards to the field
experiment

p-val
ue
p-val
ue
 Limited Usefulness of Study
Sample size may be too
small to indicate the
entirety of New Delhi

Tropical climate vs Regional Climate

Both monetary and health info may

be provided in public campaigns
The End!
Time for MCQs!
 References
Asensio, Omar I., & Delmas, M. A. (2015). Nonprice incentives and energy conservation. Proceedings of the National
Academy of Sciences of the United States of America, 112(6), E510–E515. https://doi.org/10.1073/pnas.1401880112

Asensio, Omar Isaac, & Delmas, M. A. (2016). The dynamics of behavior change: Evidence from energy
conservation. Journal of Economic Behavior & Organization, 126, 196–212. https://doi.org/10.1016/j.jebo.2016.03.012

Chen, V. L., Delmas, M. A., Locke, S. L., & Singh, A. (2017). Information strategies for energy conservation: A field
experiment in India. Energy Economics, 68, 215-227. https://doi.org/10.1016/j.eneco.2017.09.004

Harrison, G. W., & List, J. A. (2004). Field Experiments. Journal of Economic Literature, 42(4), 1009–1055.
https://doi.org/10.1257/0022051043004577

Nolan, Jessica M., Wesley Schultz, P., Cialdini, Robert B., Goldstein, Noah J., Griskevicius, Vladas, 2008. Normative
social influence is underdetected. Personal. Soc. Psychol.Bull. 34 (7), 913–923.

Shetty, D. (2021, March 26). Air Pollution Cost India $36.8 Billion In 2019. Forbes.
https://www.forbes.com/sites/dishashetty/2020/12/22/air-pollution-cost-india-368-billion-in-2019/?sh=24ba90155c
70

Steinhorst, J., Klöckner, C. A., & Matthies, E. (2015). Saving electricity – For the money or the environment? Risks of
limiting pro-environmental spillover when using monetary framing. Journal of Environmental Psychology, 43, 125–
135. https://doi.org/10.1016/j.jenvp.2015.05.012
Question #1

Which of the following statistical technique was used to estimate

the average treatment effect?
a. Randomised Controlled Trial
b. Propensity Score Matching
c. Instrumental Variable Regression
d. Difference in Differences
e. Regression Discontinuity Design
Question #1

Which of the following statistical technique was used to to

estimate the average treatment effect?
a. Randomised Controlled Trial
b. Propensity Score Matching
c. Instrumental Variable Regression
d. Difference in Differences
e. Regression Discontinuity Design
Question #2

The treatment has a lasting positive effect for:

a. Both Treatment Groups
b. Treatment Group (Health)
c. Treatment Group (Financial)
d. None of the Groups
e. Control Group and Treatment Group (Financial)
Question #2

The treatment has a lasting positive effect for:

a. Both Treatment Groups
b. Treatment Group (Health)
c. Treatment Group (Financial)
d. None of the Groups
e. Control Group and Treatment Group (Financial)
 Question #3

Which of the following shows the

average treatment effect for the
financial and health group?
a. 0.0114, -0.0155
b. -0.0758, -2.404
c. 0.000614, -0.558
d. None
e. 0.25,0
 Question #3

Which of the following shows the

average treatment effect for the
financial and health group?
a. 0.0114, -0.0155
b. -0.0758, -2.404
c. 0.000614, -0.558
d. None
e. 0.25,0