In a study by a Georgia Tech economist that could help inform future energy policy, half the participants cranked their thermostats despite knowing exactly how much each extra degree would cost them.
Prices are typically the first tool used to get people to save energy, noted Dylan Brewer, assistant professor in the Georgia Tech School of Economics. As climate change affects communities and utilities transition to sustainable sources, it’s increasingly critical for regulators and utilities to understand exactly how price affects consumers’ energy use.
“There’s kind of a puzzle that exists in the literature on energy consumption,” Brewer said. When it comes to most commodities, price drives demand, but “if the price of electricity changes, most people are not very responsive.” He wanted to test the popular theory that inelastic demand is the result of consumers not knowing the exact price of turning up the thermostat.
Read the full paper: https://research.gatech.edu/turning-heat-georgia-tech-economist-finds-price-has-little-impact-consumers-thermostat-choices