Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments

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dc.contributor.advisorVisser, Martineen_ZA
dc.contributor.authorBrühl, Johanna Mariaen_ZA
dc.date.accessioned2017-09-06T07:05:02Z
dc.date.available2017-09-06T07:05:02Z
dc.date.issued2017en_ZA
dc.description.abstractBetter feedback principles for the utility bills in South Africa need to be developed. Utility providers might be able to "nudge" consumers towards more desirable consumption patterns by delivering simpler and better feedback informed by applied behavioural sciences. Two sets of controlled experiments were conducted with over 1,500 subjects to identify bill design strategies that could overcome two major barriers to effective consumption feedback: • the complexity of the utility bill, especially with regards to tariff calculations, and • consumer's declining mindfulness of utility consumption between billing moments. The "Utility Bill Redesign" experiment, using a randomised control trial, investigates how improving billing feedback design increases consumer's understanding of energy usage and costs. More than 1,300 participants are randomly assigned to different treatment groups and receive one of nine redesigned utility bills or the current standard bill. Thereafter, participant's understanding of the bill they received is tested through a questionnaire. We find that restructuring the bill in a logical order and displaying the amount of electricity consumed in each tariff block with separate bar graphs is a successful way to increase consumer understanding of the bill, especially with regards to the step tariff. Further, the results clearly show that consumers are unable to make sense of a utility bill that is not in their home language, even when adding utility specific symbols. We conclude that significant low-cost improvements can be made to utility bills to increase consumer comprehension. In the "Attention Redirection" experiment, participants are assigned to different treatment groups and are given an online task that requires daily attention and effort in order to maximise pay-offs. We find that daily SMS reminders significantly redirect attention to the daily task. A blank graph, given to participants at the beginning of the experiment to assist them in self-managing their behaviour, has no effect on task adherence. The results illustrate how inattention routinely leads to sub-optimal behaviour in a specific task area and the resulting welfare loss. A purely bill-based strategy is rendered unsuccessful.en_ZA
dc.identifier.apacitationBrühl, J. M. (2017). <i>Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments</i>. (Thesis). University of Cape Town ,Faculty of Commerce ,School of Economics. Retrieved from http://hdl.handle.net/11427/25060en_ZA
dc.identifier.chicagocitationBrühl, Johanna Maria. <i>"Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments."</i> Thesis., University of Cape Town ,Faculty of Commerce ,School of Economics, 2017. http://hdl.handle.net/11427/25060en_ZA
dc.identifier.citationBrühl, J. 2017. Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments. University of Cape Town.en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Brühl, Johanna Maria AB - Better feedback principles for the utility bills in South Africa need to be developed. Utility providers might be able to "nudge" consumers towards more desirable consumption patterns by delivering simpler and better feedback informed by applied behavioural sciences. Two sets of controlled experiments were conducted with over 1,500 subjects to identify bill design strategies that could overcome two major barriers to effective consumption feedback: • the complexity of the utility bill, especially with regards to tariff calculations, and • consumer's declining mindfulness of utility consumption between billing moments. The "Utility Bill Redesign" experiment, using a randomised control trial, investigates how improving billing feedback design increases consumer's understanding of energy usage and costs. More than 1,300 participants are randomly assigned to different treatment groups and receive one of nine redesigned utility bills or the current standard bill. Thereafter, participant's understanding of the bill they received is tested through a questionnaire. We find that restructuring the bill in a logical order and displaying the amount of electricity consumed in each tariff block with separate bar graphs is a successful way to increase consumer understanding of the bill, especially with regards to the step tariff. Further, the results clearly show that consumers are unable to make sense of a utility bill that is not in their home language, even when adding utility specific symbols. We conclude that significant low-cost improvements can be made to utility bills to increase consumer comprehension. In the "Attention Redirection" experiment, participants are assigned to different treatment groups and are given an online task that requires daily attention and effort in order to maximise pay-offs. We find that daily SMS reminders significantly redirect attention to the daily task. A blank graph, given to participants at the beginning of the experiment to assist them in self-managing their behaviour, has no effect on task adherence. The results illustrate how inattention routinely leads to sub-optimal behaviour in a specific task area and the resulting welfare loss. A purely bill-based strategy is rendered unsuccessful. DA - 2017 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2017 T1 - Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments TI - Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments UR - http://hdl.handle.net/11427/25060 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/25060
dc.identifier.vancouvercitationBrühl JM. Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments. [Thesis]. University of Cape Town ,Faculty of Commerce ,School of Economics, 2017 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/25060en_ZA
dc.language.isoengen_ZA
dc.publisher.departmentSchool of Economicsen_ZA
dc.publisher.facultyFaculty of Commerceen_ZA
dc.publisher.institutionUniversity of Cape Town
dc.subject.otherApplied Economicsen_ZA
dc.titleDeveloping consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experimentsen_ZA
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationnameMComen_ZA
uct.type.filetypeText
uct.type.filetypeImage
uct.type.publicationResearchen_ZA
uct.type.resourceThesisen_ZA
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