Photograph by Spencer Green, Associated Press
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To cut energy use in homes, more utilities are installing smart meters (shown here), which track electricity use in real time. Some are also employing peer pressure by letting customers know if they use more power than their neighbors.

Photograph by Spencer Green, Associated Press

How Keeping Up With the Joneses Could Save You Money

Peer pressure is helping save terawatts—yes, terawatts—of power. Would it influence you? Take our poll.

Let’s be honest. Would you be more apt to conserve energy—say, turn down the air conditioner or switch to LEDs—if you were told: 1.) you’ll save money 2.) you’ll help the environment or 3.) your neighbors do it?

If you’re like almost everyone, “neighbors” is the true answer. Whatever our age, race, gender or country, behavioral science has proven the power of peer pressure in many spheres, including energy.

“The norm is a magnet. It pulls people toward it,” says Robert Cialdini, emeritus professor at Arizona State University and author of landmark research on “normative messaging.” He says people don’t want to feel abnormal, adding: “We want to be part of the majority.”

This simple fact holds huge potential. Motivating people to slash home energy use could go a long way toward reducing the heat-trapping emissions that contribute to climate change. After all, homes account for nearly a fifth of global energy use, much of it wasted.

One company is using peer pressure to change this. Virginia-based Opower has found, in working with 95-plus utilities worldwide, that consumers care more about keeping up with (or beating) the Joneses than they do about saving money or the planet.

“It’s game-changing,” says Alex Laskey, its president, of the personalized energy reports his company has sent more than 10 million homes. After learning they used more power than their neighbors, consumers saved nearly 3 terawatt-hours (or 3 billion kilowatt-hours) last year alone—enough to power all homes in a city the size of Las Vegas.

“In the next 12 months, we’ll surpass the Hoover Dam,” which produces 4.5 terawatt-hours annually, Laskey says. He spoke from the sprawling headquarters of Opower, which partnered with its first utility from a rented desk in San Francisco in 2007 and now has 600 employees across offices in four countries.

“Everyone wants to know how they measure up,” says Julie O’Brien, Opower’s behavioral researcher. She says the company’s analysis of big data finds people want simple, customized tips for lowering utility bills but will most likely act on them if shown they’re doing worse than their neighbors.

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Opower sends homes customized reports that tells them how they compare to their neighbors. 

It Started With Door Hangers

This insight caught researchers somewhat by surprise. In 2003, Cialdini’s graduate students put signs on the doors of 1,207 middle-class homes in San Marcos, California, asking residents to turn off their air conditioning and turn on their fans. The signs gave four different reasons why they should make the switch: save money, save the planet, be a good citizen and join your neighbors.

The research team expected the money-saving sign would do best, but none of the first three had any impact. Only the last one worked. Ironically, the study found that residents expected the fourth message would be the least effective, because they didn’t think they were influenced by peers.

“They think they’re free-standing entities,” Cialdini says. Yet he says people, across cultures, want to be accepted. Also, he says they see “proof” in the norm: “If the majority of people are doing it, it’s probably the right thing.”

Opower has found that customers’ eagerness to save energy has little to do with the portion of their income spent on it. In fact, the wealthier tend to conserve more. Self-identified environmentalists, if told they’re not as efficient as their neighbors, redouble their efforts.

“They want to maintain this image as above average,” Cialdini says.

But How Best to Save?

To maximize energy savings, consumers need more than just motivation. They also need helpful, easily understood information.

“These two things work together well,” says Richard Larrick, professor at Duke University’s Fuqua School of Business. His research finds people respond better to data on how much energy an appliance or car will use over its lifetime than to efficiency metrics such as miles per gallon.

“MPG is really tricky,” Larrick says. “We all know that higher is better but beyond that, it gets confusing.” He explains it this way: A big sport utility vehicle that gets 10 miles per gallon will use 10 gallons to go 100 miles. A 20 mpg sedan will use 5 gallons to cover that distance, and a 50 mpg hybrid will use 2 gallons.

So counterintuitively, he says, people actually save more fuel by switching from a 10 mpg guzzler to a 20 mpg alternative than they do by trading in a 20 mpg car for a 50 mpg one.

“Let’s help people do the math,” he says, recommending metrics for products that explain their energy cost over a long period of time or compare them to similar items.

Consumers also need to identify their home’s biggest energy hogs. They tend to think, incorrectly, that products they handle the most—such as lights or computers—consume more power than they do, whereas those they see less often—such as furnaces, water heaters or air conditioners—use the bulk of energy, according to research published last month by Ohio State University. (Learn more about six energy hogs that could be lurking in your home.)

Opower tries to both motivate and inform. It sends homes customized energy-saving tips such as thermostat settings and alerts them if they’re using more energy than they normally do. And, of course, it tells them how they compare to neighbors or homes of similar size.

Cialdini says he’s not immune to a message that employs peer pressure. “It absolutely works on me, because it’s so primitive,” he says. “It’s not just social approval. It’s informative….so I don’t want to resist it.”