Green is Good – The Impact of Information Nudges on the Adoption of Voluntary Green Power Plans

A recent trend in most developed countries has been a move toward greater reliance on renewable or “green” energy sources. This is especially true in the residential sector, where voluntary green power is offered by many electric utilities. Using a choice-based, experimental survey, this paper investigates how information nudges regarding the energy efficiency, production cost, and environmental impacts of different sources of power generation impact consumers’ preferences for adopting voluntary green-power plans. We systematically vary whether respondents receive positive and/or negative information about either the green plan or the gray plan, or neutral information as a control. As part of the design, we also vary the price premium of the green plan across choice scenarios. Based on two different participant samples totaling over 1,800 respondents and 21,000 plan choices, our results suggest that information nudges significantly impact respondents’ choice of plan. In particular, promoting the advantages of the green plan significantly increases green plan adoption, while promoting the disadvantages of the gray plan also significantly increases green plan adoption, and to a similar extent. Moreover, the documented effects of information nudges are robust across different price premiums for the green plan. Lastly, we show that the magnitudes of the information nudges are sizable and roughly equivalent to a change in the price premium of $5/month. Our results have clear energy policy and green power marketing implications of a plausible, economical, and effective mechanism to increase residential adoption of green-power plans.

Issue Date:
Jan 17 2018
Publication Type:
Conference Paper/ Presentation
Total Pages:
JEL Codes:
Q40, Q20, Q50, Q01, C83, C90

 Record created 2018-01-17, last modified 2018-01-22

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