Each subject decided the temperature setting of the air conditioner between the peak hours (from 13:00 to 16:00) during the summer season in Japan. This electricity saving amounts to approximately 9.2% of the subjects' average total electricity consumption in the summer season. In treatment group 2, each subject received the average consumption amount of the electricity consumption of all subjects in the same session.
In this experiment, each subject repeatedly selected the temperature of the air conditioner between 10 periods.
Factor analysis of temperature choice
The dependent variable (Choice) is ordinal and depends on the choice of air conditioner temperature. Therefore, the positive coefficients of the independent variables meant that the variable was a factor that encouraged electricity saving behavior. In this estimate, val was the tangent of the social value orientation circle (the value of the motivation vector).
However, such a scheme reduces the electricity saving behavior of the subjects with a higher initial demand.
Electricity conservation effects
These results suggest that persons with greater initial demand discourage electricity conservation behavior under social comparison schemes. We calculated the cross-effects between all treatments and initial demand based on the estimation results of Estimation 3. The cross-effect between treatment group 1 and initial demand increased by approximately 6.7% of the total electricity consumption.
The cross-effect between treatment group 3 and initial demand also increased electricity consumption by approximately 7.5%.
Social Welfare Analysis
Welfare calculation
If the social comparison is conducted in a region that has a large variance in electricity demand, the treatment may not have the expected effect of encouraging electricity-saving behavior. On a normal day, electricity companies sell electricity to the consumer at the same price with the normal marginal cost (25 cents per kWh). However, the marginal cost of supplying electricity increases during peak periods because utilities must use an additional plant, which requires a higher marginal cost (50 cents per kWh).
When the electricity companies change the price of electricity to 50 øre, total demand falls from D* to Dc. However, electricity companies may not change their tariff due to technical or political constraints. Provided that technological advances, such as the use of a smart grid, can enable power companies to monitor power consumption in real time, they can use the CPP scheme during rapid increases in demand and thus avoid loss of producer surplus.
In contrast, Figure 4.B shows the welfare gain of information provision based on social comparison. If people voluntarily reduce their electricity consumption according to the social comparison scheme, then such people will obtain utility functions, including moral utility. In the case where almost all individuals feel good feelings from the altruistic conservation of electricity, the demand curve shifts to the lower side to consider.
Thus utility gain from electricity conservation is shown by social equation schemes as the aegf trapezoid. Allcott and Kesller (2019) define such utility loss under the social comparison scheme as the moral tax effect.
Welfare of moral utility
This improvement effect in treatment group 3 was shown to be close to the value of the CPP improvement effect. If such a factor affects the behavior of each subject, we must add the effect of moral utility to social welfare. The results of calculating the effect of moral utility in each treatment group are shown in Table 5.
The improvement in social welfare through the moral utility effect in treatment group 1 was 4.44 million USD. Moreover, the moral utility effect in treatment group 3 was largely significant in our calculation results (34.92 million USD). In Figure 4.B, if the quantity conserved by the treatments increases (distance between D* and Ds), the demand curve that includes the moral utility term (D') shifts to the left.
Consequently, the total welfare improvement from the social comparison becomes large if people gain moral utility from voluntarily conserving electricity. In particular, the overall improvement in well-being in treatment group 3 (US$57.27 million) was more than double the improvement in the CPP control group (US$22.67 million). If we compare only the direct effect between treatment group 3 and the CPP control group, the improvement in well-being was about the same.
The total welfare improvement in treatment group 1 was approximately $16.42 million when we consider the moral utility effect. Overall welfare improvement in treatment group 2 was about the same as in the control CPP group.
Adjusted welfare of moral utility and moral tax
Although the improvement in well-being in treatments 1 and 2 did not exceed the improvement in well-being in the CPP control group, the impact of the treatments can be evaluated as a desirable voluntary conservation program. The second question was: "If your electricity consumption is less than that of your efficient neighbors, do you feel happy?" For this question, we also provided a four-level choice set. If subjects felt guilty because of the information, then providing the information imposed a loss of utility on them.
In contrast, if subjects felt happy because of the information, they benefited from the information provision. A summary of the questionnaire results is shown in Table 6, which indicates the proportion of each response for each question. More than half of the participants answered that they felt happy when their electricity consumption was more efficient than that of their neighbors.
The total percentage of subjects who responded with “strong feelings” and “feelings” regarding guilt was approximately 28%. The results of the questionnaire showed that approximately 28% of the subjects felt guilty under the social comparison scheme. Although the moral utility effect exceeds the moral cost in treatment 2, almost all of the moral utility effect is offset by the moral cost effect.
This result means that we should pay special attention to the distribution of one's perception of the social comparison system. The results of the questionnaire show that 63% of recipients said that the HER did not make them feel “proud”.
Discussion and Conclusion
Finally, the moral effect of taxes (US$1.36 million) is not compared to the moral benefit effect (US$20.15 million) in treatment group 3, where subjects received information about the electricity use of “efficient” subjects. Relatedly, Allcott and Kessler (2019) find that the welfare benefit of social comparison through HER was overestimated in previous studies because these studies ignored the significant costs incurred by the recipients of the push. The study finds that the benefit of well-being through EI becomes positive, although it involves psychological costs.
Allcott and Kessler (2019) implement a questionnaire about feelings regarding the HAIR, which is similar to our questionnaire. Given our questionnaire results, there are therefore significant differences in how much subjects felt guilty or happy in each region. However, when they realize that they cannot do better than others or free themselves from unwanted behavior, they tend to give up.
This finding implies that the effect of the social comparison scheme depends on the distribution of the initial demand for the target good. For example, in a laboratory experiment, Gill et al. 2019) determine how individuals react to a certain ranking they achieve. They find that grading is particularly effective in motivating individuals who perform very well or very poorly.
Therefore, the social benchmarking scheme should consider the relationship between information and the distribution of consumers' initial electricity demand. When we calculate total welfare based on the adjustments of these psychological factors (moral utility and moral tax), the effect of moral cost may exceed the effect of moral utility if each subject receives the average amount of consumption of all subjects.
In this situation, if you increase the temperature of an air conditioner, you can save 10% of your total electricity consumption for every 1 ℃ increase in room temperature. Question 1: If you increase the temperature of the air conditioner to 26 ℃ (the saving amount of electricity is 10% of your total usage in daily life. Moreover, you can reduce your electricity rate by 〇〇 Japanese yen), how much money would it be? you need to sustain the temperature increase. Question 2: If you increase the temperature of the air conditioner to 27 ℃ (the saving amount of electricity is 20% of your total usage in daily life. Moreover, you can reduce your electricity rate by 〇〇 Japanese yen), how much money would it be? you need to sustain the temperature increase.
Question 3: If you turn up the temperature of the air conditioner to 28℃ (The saving amount of electricity is 30% of your total consumption in daily life. In addition, you can reduce your electricity fee by 〇〇 Japanese yen), how much money would you need to maintain the temperature rise. Question 4: If you turn up the temperature of the air conditioner to 29℃ (The saving amount of electricity is 40% of your total consumption in daily life. In addition, you can reduce your electricity fee by 〇〇 Japanese yen), how much money would you need to maintain the temperature rise. If you turn off the air conditioner, your room temperature will be 30℃ (The saving amount of electricity is 50% of your total consumption in daily life.
Note: Electricity charge = Electricity charge at 25℃ － amount of electricity saved depending on your choice. At the bottom left of the screen, you can confirm your electricity usage (kWh), electricity charge (Japanese yen) and electricity price (per kWh) in the initial setting (25. After confirming the initial situation, you please select the temperature setting of the air conditioner.
In the upper left corner of the screen, you can see your electricity consumption and the average electricity consumption of "efficient" entities. The graph also shows the amount of your electricity consumption and the average electricity consumption of "efficient" entities. To confirm the magnitude of the dropout effect in each treatment, we run an OLS regression based on the following formulation.
In this formulation, the dependent variable (𝑒𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑖𝑡𝑦9 . 𝑟𝑒𝑓9 ) indicates how much each subject's electricity consumption differed from the reference period 9. The independent amount of electricity consumption 9. 𝑡𝑟𝑖𝑐𝑖𝑡𝑦1 . 𝑟𝑒𝑓1 ) shows how much each subject's electricity consumption differed from the referenced amount of electricity consumption in period 1.
