Clean Energy Discussion on “Getting Your Money’s Worth”

I’ve noticed that a lot of the interviews I’m asked to do around “Renewable Energy – Facts and Fantasies” have very little to do with the subject matter of the book directly. I’m headed back to New York City in a couple of weeks to tape a TV show called “Getting Your Money’s Worth,” which, as the name suggests, helps viewers make better purchasing decisions.

Of course, there’s a tie-in here. Are consumers willing to shell out a few extra cents a kilowatt-hour for green electricity? That’s an interesting question. And here’s what Dr. Jason Scorse, behavioral economist, told me on the subject:

There is a phenomenon known as “status quo bias,” which means that people tend to keep doing what they’ve been doing. The inertia of change is very strong and hard to break, even if it’s a rational interest to do so.

So you ask people, “If green power were offered to you, full renewable power, that was say a ten percent premium on your electricity bill, would you sign up?” It has all these benefits, you help climate change, etc. You get rates in the realm of 80 percent of people say “Yeah, if it were a small fee, I would.” Between two-thirds and 80 percent. You then offer renewable power to people and you then send them a notice and say, “Here, we’re offering a green power, would you like to sign up? It’s only this much more a month.” You get rates of uptake five to ten percent max.

So you have this huge disconnect. Two-thirds or 80 percent said they’d do it, you offer it to them, most of them do not accept it — why is that? It’s because of default bias, or inertia.

You could change it so that when you get a new account with PG&E in California or whatever it is and other states, the default was you’re automatically enrolled in the green power, but you then had to be ask to be taken out. You say, “If you want to save money and go to the dirty power, your bill will be ten percent less; just let us know.” You’re going to get that 80 percent. Why? Because it was the default. People, when they get the thing in the mail, they’ll say “Yeah, yeah, I’ll do it,” but they never get to it, they procrastinate. If you’re automatically enrolled, people do it. The second though, is to see how the psychology changed it. It goes from, “Should I do something that I’ll feel good about?” to “Do I really want to change to something bad?” The psychology changes. “I’m automatically enrolled in this. I kind of feel bad, switching to dirty power. Just to save a few bucks, do I want to pollute the earth and poison people?”